Index
Publication Date:
16 Mar 2023
Page Range:
153–160
Free access

Providing a comprehensive overview of the body of law that regulates the insurance business, this Advanced Introduction evaluates the governing principles, policies, values, and purposes of insurance legislation and related judicial doctrines. It examines the ways in which the industry's origins help us understand the present, and how insurance connects to major public policy issues that will shape the world for future generations.

abortion 150–51
Abraham, K. S. 31, 149
accidental death insurance 106–7
accident insurance 34
additional insureds 58
admitted carriers 44
adverse selection 11–12
affirmative warranty 96
agency writers 41
agents 41, 42
aggregate limits 132–3
allied lines 38
all-risk coverage 61
anti-concurrent causation provision 114
arrangement
defined 16
Arrow, K. J. 14
assumptions of insurance
fortuity 69–71
indemnity
coordination of benefits 84–5
other insurance clauses 84
principle 76–80
subrogation 80–84
insurable interest
doctrine 73–5
rationale 72–3
recurring issues at boundaries 75–6
automobile insurance 35
see also motor vehicles
automotive risk 146–7
like kind and quality limitation 78
automotive risk 146–7
Babylonians 32
bad faith 67–8, 99, 136
see also good faith and fair dealing
betterment clause 78
binders 63–4
Bitcoin 42
blockchain 42
bodily injury 129
bottomry contract 32
broker 41, 42
burning-limits policies 119
business of insurance 1–2
captive agents 41
captive insurance company 44
Cardano 4
cash value 37
casualty insurance 38
catastrophe bonds 45
catastrophes
difficult risks and 137–9
natural disasters 137–8
cat bonds see catastrophe bonds
causation
all-risk policies 112–13
cause in fact 111–12
choice of rule 114
described 111
language, policy 114–15
options 113–14
proximate cause or legal cause 112
specified-risk policies 112
CDW see collision damage waiver (CDW)
cede business 39
p. 154certificate holders 41
cestui que vie (CQV) 59
claims adjusting process 46
claims-made policies 129–30
climate change 137–9
coinsurance 62–3
collision damage waiver (CDW) 18–19
combined limit 61
computer technology 139–41
conceptualizations of insurance
conceptions 31
contract 24–6
private governance, insurance as 30–31
product, insurance as 27–8
public utility, insurance as 28–30
conditional binding receipts 63
conditions 60, 65–6
conflict of interest see liability insurance
consumer services 55
contextual approach 90
contract
aleatory versus bilateral 24–5
breach and remedies 25–6
defined 24
insurance purchase 26
law 48–9
interpretation 89–93
misrepresentation 93–6
reasonable expectations 86–9
remedies for nonperformance 98–100
waiver and estoppel 96–7
parties 57–9
coordination of benefit clauses 84
correlated risk 11
coverage 59–61
intentionally caused loss and accident
first-party insurance 105–8
third-party insurance 108–11
policy text 101
scope of
causation see causation
COVID-19 103–5
intentionally caused loss and accident 105–11
war 102–3
covered cause of loss 60
COVID-19 pandemic 103–5, 138
criminal law 48
criminal liability 135
cyber-insurance 147
cyber-risk 139–41
declarations page 57
dec page see declarations page
deductible 62
defense-only liability insurance 119
defense risk 119
defense-within-limits policies 119
definition of insurance 15–19
direct writers 41
disclosure regulation 54–5
disregard-the-limits test 128
distribution
channels 41–2
of risk 16
diversification 7–8
doctrine of reasonable expectations 88
double indemnity 79
duties
to defend 67
to indemnify 67
to settle 127–9
on insureds 65–6
see also duty to defend
duty to defend
attorney's obligations 124–5
covered and non-covered claims 123–4
eight-corners rule 121–2
extrinsic evidence rule 122–3
potentiality rule 122
reservation of rights 125–7
Easton, D. 148
efficient cause 114
efficient proximate cause doctrine 114
eight-corners rule 121–2
elements of insurance contract 56
aggregate limit 61
all-risk coverage 61
p. 155binders 63–4
coinsurance 62–3
combined limit 61
coverage 59–61
declarations page 57
deductible 62–3
“Definitions” 60
exclusionary language 60
insurer's obligations
bad faith 68
conditions 60, 65–6
duty to defend 67
duty to indemnify 67
first-party insurance 66–7
good faith and fair dealing 67–8
insuring agreement 59–60
maximum limits 63
moral hazard 63
parties and interests 57–9
per-occurrence limit 61
per-person limit 61
policyholder's obligations
conditions 66
duties on insureds 65–6
policyholder–insurer agreement 65
premium payment 64–5
split limit 61
sublimit 61
valued policies 61–2
estoppel 97
Ewald, F. 152
excess lines insurer 44
exclusions 60
exclusive agents 41
exposure trigger 131
extrinsic evidence rule 122–3
factual expectancy test 74
facultative reinsurance 39
Federal Insurance Office (FIO) 51
Fermat 4
final adjudication clauses 134
financial regulation 54
fire insurance 37–8
first-party insurance
accidental death insurance 106–7
life insurance 105–6
property insurance 107–8
fortuity principle
described 69
liability insurance 70
life insurance 70
nonfortuity defenses 71
simplicity 70–71
gambling see wagering
general average principle 32
global insurance premiums 1
good faith and fair dealing 49, 64, 67–8, 87, 129
see also bad faith
grace period 64–5
Graunt 4
group insurance 41
group marketing 41
gun homicide 150
gun suicide 150
health insurance 30, 35–6, 151
other insurance clauses 84
private insurance 35–6
Huygens 4
increase of hazard clause 108
indemnity
principle
coordination of benefits 84–5
life insurance 77–9
like kind and quality limitation 78
other insurance clauses 84
policy limits 77–8
property insurance 76–7
replacement cost coverage 80
valued policies 79
risk 119
subrogation 83–4
assertion of 81
described 80–81
in liability insurance 82
in life insurance 82
limitations 83
in property insurance 81
p. 156wholeness notion 82
indemnity-only liability insurance 119
independent agents 41
index-based insurance see parametric insurance
industry loss warranties 46
injury-in-fact trigger 131
inland marine insurance 37
insurable interest
operationalization
factual expectancy test 74
interest defined 73
legal interest test 74
love and affection test 74–5
rationale 72–3
1774 Act of Parliament 72
1746 Act of Parliament 72
gambling or wagering 72–3
public policy 73
recurring issues at boundaries 75–6
insurance
contract 11
definition 15–9
distribution and marketing 41–2
elements of contract see elements of insurance contract
interests 57–9
order and social regulation 148–52
organizations and entities see organizations and entities of insurance
origins and rise 32–6
parties 57–9
roles and purposes see roles and purposes of insurance
types of 36–41
value of 13–4
see also insurance business
insurance business 29
alternative risk management arrangements 44–7
distribution and marketing 41–2
entities 43–4
origins and rise of 32–6
risk in 6
subrogation 83–4
types 36–41
insurance-linked securities (ILS)
cat bonds 45
described 44–5
insurance regulation see regulation
insureds 16, 57
additional insureds 58
cestui qui vie (CQV) 59
duties 65–6
see also policyholders of
and insurer's interests
attorney's obligations 124–5
defense under reservation of rights 125–6
plaintiff's claim 126
reservation of rights approach 126–7
named insureds 58
omnibus clause 58–9
risk pools 11–2
security as objective 25–6
versus policyholders 57–8
see also policyholders
insurers 12
defenses 94–5
excess lines 44
misrepresentation 94–5
obligations 66–8
primary or direct 39
reciprocal associations 43
reciprocal exchanges 43
reinsurers 11
risk aversion 12
standard lines 44
surplus lines 44
intentional act exclusion 105–11
intentionally caused loss
accidental death insurance 106–7
fortuity 69–70
liability insurance 108–11
life insurance 105–6
property insurance 107–8
versus accident 105–11
interpretation
agreement 89–90
contextual approach 90
contra proferentem 92
plain meaning rule 91
p. 157policyholder perspective 91–2
standardization of forms 92–3
Keeton, R. E. 88
Kessler, F. 87
Kimball, S. L. 22, 29, 88, 152
known risk defense 71
large numbers, law of 9–11
liability insurance 34–5, 108–11, 116–36
automobiles 145–7
coverage
“as damages” and suits 130–31
number of occurrences 132–3
occurrence versus claims-made coverage 129–30
punitive damages and liability for aggravated conduct 133–5
triggers 131
defense under reservation of rights 125–6
described 116
duty to defend
covered and non-covered claims 123–4
eight-corners rule 121–2
extrinsic evidence rule 122–3
potentiality rule 122
duty to indemnify and duty to defend 119–21
fortuity principle 70
insurer's and insured's interests, potential tension between
attorney's obligations 124–5
defense under reservation of rights 125–6
plaintiff's claim 126
reservation of rights 126–7
other insurance clauses 84
plaintiff's claim 126
remedies for insurer's breach of defense and settlement obligations 135–6
reservation of rights approach 126–7
settlement obligations
full-coverage defenses 127
insurer and insured interests 128
reasonable settlement decision 128–9
subrogation 82
tort liability and 117–18
purpose of tort law 118–19
rules of tort law 118
licensing regulation 54
life insurance 35, 37
fortuity principle 70
indemnity 78–9
indemnity principle 77
intentional self-destruction 105–6
interest 74–5
subrogation 82
Lloyd's associations 43
Lloyd's of London 34, 43
loss in progress defense 71
loss payable clause 58
love and affection test 74–5
Lombards 33–34
made-whole rule 82
manifestation trigger 131
marine insurance 37
marketing of insurance 41–2
market regulation 54
master policy 41
Méré 4
microinsurance 39
misrepresentation
described 93–4
insurers’ defense 94–5
warranty 95–6
moral hazard 12–13, 63
motor vehicles
automotive risk 146–7
cyber-insurance 147
like kind and quality limitation 78
no-fault systems 146
products liability 147
tort-liability insurance system 145–6
p. 158multiple trigger 131
mutual aid societies 32
named insured 58
National Association of Insurance Commissioners (NAIC) 51
natural disaster risks 138
NMA 464 103
nonfortuity defenses 71
number of occurrences
aggregate limits 132–3
cause analysis 132
per occurrence limits 132
property insurance 133
unifying directive 133
occurrence-based policies 129–30
omnibus clauses 58
organizations and entities of insurance
captive insurance company 44
Lloyd's associations 43
reciprocal exchanges 43
standard lines insurers 44
stock company 43
other insurance clauses 84–5
parametric insurance 46–7
basis risk 46–7
described 46
industry loss warranties 46
participants see certificate holders
Pascal 4
per occurrence limits 132
plain meaning rule 91
policyholders see insureds
described 10–11
obligations 64–6
versus insureds 57–8
policy provisions 60
politics
defined 148
potentiality rule 122
primary or direct insurer 39
principal object and purpose test 17–18
private governance 30–31
private law
contract law 48–9
contracts 49–50
criminal law 48
tort law 48
procrastination 8
product
insurance as 27–8
liability 147
regulation 54
property damage 129
property insurance 38
factual expectancy test 74
indemnity principle 76–7
legal interest test 74
number of occurrences 133
other insurance clauses 84
subrogation 81
public policy 134
public utility
characteristic of 30
defined 28–9
ordinary business 29
utilities described 29
punitive damage liability
conduct 134
described 133–4
final adjudication clauses 134–5
quantifying risk
catastrophic risks 7
costs or benefits 6
probabilities 5–6
reasonable expectations 86–7
policyholder's perspective 89
standardization of consumer contracts 87
reciprocal associations 43
reciprocal exchanges 43
redistribution 151–2
regulation
entities 50–52
methods 54–5
rationales for 52–3
command economies 52
excessive and discriminatory rates 53
policyholders 53
p. 159transparency 53–4
unfair practices 53
reinsurance 11, 39
facultative 39
parametric insurance 46
treaty 39
reinsurers 11
remedies
limitations of traditional contract 99
for nonperformance 98–100
replacement cost coverage 80
retroactive date 130
risk aversion 9–13
adverse selection 11–12
insurance contract 11
insurers 12
large numbers, law of 9–10
moral hazard 12–13
non-correlated risk 11
policyholders 10–11
precautions to prevent loss 12–13
risk profiles 11
risk-transferring 9
risk management see risks
risks 1, 148–9
aversion see risk aversion
classification 141–2
communitarianism 143–4
credit information 144
cultural norms 143
fairness 144
gender correlation with loss 142–3
race, national origin, or religion 142
defined 16
inevitability 4–5
insurance-linked securities (ILS) 45
management methods 7–9
consequences of events, minimization of 7
diversification 7–8
loss 8–9
probability of negative outcomes, minimization of 7
procrastination 8
self-insurance strategy 8
management strategy 1
quantifying 5–7
transfer and distribution 14
roles and purposes of insurance
defining insurance
arrangement 16
CDW 18–19
contracts of sale 15
distribution 16
principal object and purpose test 17–18
product warranty 17–18
risk defined 16
transfer 16
economic activity 13
non-commercial world 13–14
risk aversion see risk aversion
risk spreading, insurance roles beyond 19–20
capital accumulation and allocation 20
gatekeeping role 21
information production and dissemination 20–21
redistribution of wealth 21–2
social values and norms 22–3
risk transfer and distribution 14
self-insurance 8, 40
settlement obligations 135–6
smart-gun technology 150
social media 42
social regulation
abortion 150–51
government in 149–50
gun ownership in US 150
redistribution 151–2
resources distributed within society 151–2
solvency and stability 53–4
Spanish Civil War (1936–39) 102
special purpose vehicle (SPV) 44–5
specified peril policy 60–61
specified risk 60
split limit 61
standardization
p. 160of consumer contracts 87
of forms 92–3
standard lines insurers 44
stock company 43
subrogation 83–4
assertion of 81
described 80–81
in liability insurance 82
in life insurance 82
limitations 83
in property insurance 81
wholeness notion 82
suicide 105–6
supervision 50
surplus lines insurer 44
surrogate government 31, 149
terms
coverage 60
policy 57, 61
terrorism 138
third-party insurance 108–11
see also liability insurance
time element coverage see property insurance
title insurance 38–9
tort law 48
transactions costs 145–6
transfer
defined 16
transparency 53–4
treaty reinsurance 39
trigger of coverage 131
tripartite relationship and conflicts of interest 124–6
triple trigger 131
types of insurance 41
casualty insurance 38
fire insurance 37–8
inland marine insurance 37
life insurance 37
line of insurance 36
marine insurance 36–7
microinsurance 39
property insurance 38
reinsurance 39
self-insurance 40
title insurance 38–9
underwriters 34, 43
unfair practices and discrimination 53
unifying directive 133
utility, public see public utility
valued policies 61–2, 79
wagering 1, 4, 11, 45, 72–6
waiver 96–7
war exclusion 102–3
warranties 95–6
in title insurance 38–9
websites 42
wholeness notion 82
Williston, S. 27, 28
Cover Advanced Introduction to Insurance Law
Advanced Introduction to Insurance Law
Publication Date:
16 Mar 2023
Print ISBN:
9781800884212
eISBN:
9781800884229
DOI:
https://doi.org/10.4337/9781800884229
Page Count:
170
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