insurance law 101
TRANSCRIPT
Insurance Law 101Stewart K. Schmella
McCormick, Lanza & McNeel, LLP
December 3, 2014
What is Insurance?
An insurance policy is a contract in which a promise is conditioned upon the happening of a fortuitous event, an event of chance.
In an insurance arrangement, the insurer assumes the risk specified in a policy in exchange for a premium paid by an insured.
In re Texas Ass’n of School Boards, Inc., 169 S.W.3d 653, 658-59 (Tex. 2005).
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Insurance vs. Gambling: Insurable Interest
Purpose: Discourage use of insurance for illegitimate purposes.
No insurable interest? No right to recover under policy.
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Different Types of Insurance: Auto
Liability
Collision
Comprehensive
Underinsured Motorist
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Different Types of Insurance: Health
Medical
Vision
Dental
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Different Types of Insurance: Property
Homeowners
Renters
Flood
Valuable Personal Property
Art
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Different Types of Insurance: Life
Term Life
Whole Life
Accidental Death and Dismemberment (AD&D)
Short Term Disability
Long Term Disability
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Different Types of Insurance: Business
Commercial General Liability (CGL)
Business Auto
Builder’s Risk
Employee Practices
Errors and Omissions
Directors and Officers
Workers’ Compensation12/3/2014Insurance Law 101
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First Party Insurance
The insured suffers loss directly.
.
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Third Party Insurance
Other persons (not the insured) sustain losses for which the insured may be legally responsible.
Claims-made vs. occurrence-based.
Duty to defend vs. duty to indemnify.
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Insurance Law: Three Broad Categories
Regulation of the business of insurance
Regulation of insurance policies
Regulation of claims handling practices
Texas Commissioner of Insurance Julia Rathgeber
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Texas Department of Insurance
Licensing
Compliance and enforcement
Financial regulation
Insurance fraud
Advertising
Technical Analysis
Workers’ Compensation12/3/2014Insurance Law 101
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The Insurance Policy
Elements:
Declarations
Coverage Agreement
Definitions
Conditions
Exclusions
Endorsements
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Claims Handling
The “special relationship.”
Insurer’s duty of good faith: settle claim
when the insurer’s liability is reasonably
clear.
The insurer must conduct a reasonable
and timely claims investigation.
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Insured’s Remedies
Breach of contract
Violations of Texas Insurance Code
Violations of DTPA
The insured can recover damages, attorney’s fees, and statutory interest
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Moral hazard problem
Do insureds behave differently because they have insurance?
Solutions: make the insured share the risk.
Deductibles
Co-pays
Rate increases
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Questions?
Stewart K. Schmella
McCormick, Lanza & McNeel, LLP
4950 Bissonnet
Bellaire, Texas 77401
713-523-0400
http://www.mlm-lawfirm.com
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