Professional Documents
Culture Documents
Three Parties
• Fundamental Doctrines Principal
Agency Law -Insurer
Contract Requirements Agent
Distinguishing Characteristics -Has the right to fulfill the
of Insurance Contracts insurer’s responsibilities
Third Party
1
Agency Law Agency Law
Agent’s authority can be Agent has binding authority
1. Actual authority- An agent is able to secure
This arises where the Principal's words or conduct
(“bind”) coverage for an insured
reasonably cause the Agent to believe that he or she has
been authorised to act. without any additional input
2. Apparent authority- from the insurer.
If a Principal creates the impression that an Agent is
authorised but there is no actual authority, Third Parties are
protected so long as they have acted reasonably.
2
Agency Law (Cont.) Requirements of a Contract
Estoppel - cannot claim a right previously Offer and Acceptance
waived Consideration
Agency by estoppel is created if someone acts Competent Parties
as an agent with the consent of the insurer Legal Purpose
Legal Form
3
Distinguishing Characteristics of Wal-Mart Collected On Deaths
Insurance Contracts (Cont.) • TAMPA - When Karen
Armatrout died in 1997, her
• Indemnity Concept employer, Wal-Mart, collected
thousands of dollars on a life
– Insurable Interest insurance policy the retail giant
• Life - at inception of contract had taken out without telling her,
according to a lawsuit filed in
• Property - at time of loss U.S. District Court. Armatrout
was one of about 350,000
employees Wal-Mart secretly
insured nationwide, said Texas
attorney Michael D. Myers, who
estimated the company collected
on 75 to 100 policies involving
Florida employees who died.
4
Today’s Lecture Application
Insurance Contracts The potential insured offers to buy coverage
Applications and Binders by submitting an application.
Parts of the Contract The insurer decides whether to accept the
Declarations offer.
Insuring Clauses
Exclusions and Exceptions
Conditions
Endorsements and Riders
5
Exclusions and Exceptions Types of Exclusions
Reasons for Exclusions Excluded locations
Ideal Requisites for Insurability Excluded perils
Possibility of catastrophe Excluded property
Fortuitous Excluded losses
Definite
Standardize the Risk
Avoid Duplication of Coverage