Chapter 37.docx - BUSINESS LAW Chapter 37 Insurance 1 Definitions and Types of Insurance Know the basic types of insurance for individuals Name and

Chapter 37.docx - BUSINESS LAW Chapter 37 Insurance 1...

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BUSINESS LAW Chapter 37 Insurance 1. Definitions and Types of Insurance Know the basic types of insurance for individuals. Name and describe the various kinds of business insurance. Section Outline Insurance is a contract of reimbursement. An insurer is the company or person who promises to reimburse. The insured (assured) is the one who receives the payment, except in case of life insurance, where payment goes to the beneficiary named in the life insurance contract. The premium is the consideration paid by the insured—usually annually or semiannually—for the insurer’s promise to reimburse. The contract itself is called the policy . The events insured against are known as risks or perils . Regulation of insurance is left mainly in the hands of state, rather than federal, authorities. Public (or social) insura nce includes Social Security, Medicare, temporary disability insurance, and the like, funded through government plans. Private insurance plans are all types of coverage offered by corporations or organizations. Types of Insurance for the Individual : o Life insurance: It provides for an insured’s family or some other named beneficiaries on the insurer’s death. Two general types are available: term insurance provides coverage only during the term of the policy and pays off only on insured’s death; whole-life insurance provides savings as well as insurance and can let the insured collect before death. © 2017 FlatWorld 1
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BUSINESS LAW o Health insurance: It covers the cost of hospitalization, visits to the doctor’s office, and prescription medicines. o Disability insurance : It pays a certain percentage of an employee’s wages (or a fixed sum) weekly or monthly if the employee becomes unable to work through illness or an accident. o Homeowner’s insurance : It provides for damages or losses due to fire, theft, and other named perils. o Automobile insurance : It covers liability for bodily injury and property damage, medical payments, damage to or loss of the car itself, and attorney’s fees in case of a lawsuit. o Other liability insurance: A personal liability policy covers many types of risks and can give coverage in excess of that provided by homeowner’s and automobile insurance. Types of business insurance o Workers’ compensation : Almost every business in every state must insure against injury to workers on the job. o Automobile insurance : Any business that uses motor vehicles should maintain at least a minimum automobile insurance policy on the vehicles, covering personal injury, property damage, and general liability. o Property insurance : No business should take a chance of leaving unprotected its buildings, permanent fixtures, machinery, inventory, and the like.
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