BL-Chapt49 - Print Chapter Page 1 of 24 Insurance Chapter...

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Insurance Chapter Introduction 49-1 Insurance Terminology and Concepts 49-1a Insurance Terminology 49-1b Classifications of Insurance 49-1c Insurable Interest 49-2 The Insurance Contract 49-2a Application for Insurance 49-2b Effective Date 49-2c Provisions and Clauses 49-2d Interpreting Provisions of an Insurance Contract 49-2e Duties and Obligations of the Parties 49-2f Defenses against Payment 49-3 Types of Insurance 49-3a Life Insurance 49-3b Fire and Homeowners' Insurance 49-3c Automobile Insurance 49-3d Business Liability Insurance Chapter Recap Page 1 of 24 Print Chapter 2010-8-30 ..
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Chapter Introduction Protecting against loss is a foremost concern of all property owners. No one can predict whether an accident or a fire will occur, so individuals and businesses typically protect their personal and financial interests by obtaining insurance. Insurance is a contract in which the insurance company (the insurer) promises to pay a sum of money or give something of value to another (either the insured or the beneficiary) to compensate the other for a particular, stated loss. Insurance protection may provide for compensation for the injury or death of the insured or another, for damage to the insured's property, or for other types of losses, such as those resulting from lawsuits. Basically, insurance is an arrangement for transferring and allocating risk. In general, risk can be described as a prediction concerning potential loss based on known and unknown factors. Risk management normally involves the transfer of certain risks from the individual to the insurance company by a contractual agreement. We examine the insurance contract and its provisions in this chapter. First, however, we look at some basic insurance terminology and concepts. Page 2 of 24 Print Chapter 2010-8-30 ..
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49-1 49-1a 49-1b Insurance Terminology and Concepts Insurance Terminology Classifications of Insurance Like other legal areas, insurance has its own special concepts and terminology, a knowledge of which is essential to an understanding of insurance law. An insurance contract is called a policy ; the consideration paid to the insurer is called a premium ; and the insurance company is sometimes called an underwriter . The parties to an insurance policy are the insurer (the insurance company) and the insured (the person covered by its provisions). Insurance contracts are usually obtained through an agent, who normally works for the insurance company, or through a broker, who is ordinarily an independent contractor. When a broker deals with an applicant for insurance, the broker is, in effect, the applicant's agent (and not an agent of the insurance company). In contrast, an insurance agent is an agent of the insurance company, not an agent of the applicant. As a general rule, the insurance company is bound by the acts of its agents when they act within the scope of the agency relationship (see
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This note was uploaded on 10/12/2011 for the course ACCT 362 taught by Professor Mint during the Fall '11 term at CUNY Queens.

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BL-Chapt49 - Print Chapter Page 1 of 24 Insurance Chapter...

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