Deck 38: Types of Insurance

Question 1

What is a no-fault insurance plan?

Answer 1

Types of Automobile Insurance Coverage:
All states have minimum financial responsibility laws related to automobile insurance coverage that serve the purpose of ensuring that the driver of a vehicle be able to pay for damages related to driving.
The minimum amounts vary depending on the state requirements. It is important to note that any term within an insurance policy will only pay out the amount stated on the policy.
No insurance company will pay for debt arising from an incident over and above the stated coverage.
No-Fault Insurance Coverage:
Under no-fault insurance coverage, a person may be compensated for an injury without having to pursue a case in court to determine fault. These laws vary by state; however, the basics include the following:
1. Regardless of fault, an insured person may collect from his/her insurance company for medical expenses and loss of income. Passengers or pedestrians injured by a car are compensated by the insurance company that covers the car.
2. Property damage is not covered, with the exception of a few states.
3. A person's right to sue for compensation is limited to cases of death or serious and permanent injuries. Some states require that the injured's medical expenses exceed a threshold figure which is a predetermined amount set by the state.

Question 2

Thomas Hasselle injured his wife, Shirley, when he accidentally hit her with their car. They were both named insureds under then Alfa Insurance Corporation (Alfa) automobile policy. The policy excluded liability coverage for "any bodily injury to any covered person." "Covered person" included any named insured. Alfa denied liability coverage for Shirley's injuries. Should Alfa be allowed to deny liability coverage?

Answer 2

Types of Automobile Insurance Coverage:
All states have minimum financial responsibility laws related to automobile insurance coverage that serve the purpose of ensuring that the driver of a vehicle be able to pay for damages related to driving.
The minimum amounts vary depending on the state requirements. It is important to note that any term within an insurance policy will only pay out the amount stated on the policy.
No insurance company will pay for debt arising from an incident over and above the stated coverage.
Legal Reasoning:
In Alfa Insurance Corporation v. Hasselle , 74 So.3d 371 (2011), the trial court found in favor of the Hasselles.
The appellate court determined errors and reversed all claims in favor of Alfa because Alfa provided coverage under the policy's uninsured motorist and medical-payment provisions and excluded Shirley from liability coverage under the policy terms.
Therefore, Alfa should be ALLOWED to deny liability coverage.

Question 3

What is the difference between level-term and decreasing-term life insurance?

Answer 3

Level-term Life Insurance:
In level-term life insurance, the denomination is written in $1,000 dollar units. The face value of the policy is unchanged during the policy and there is no investment that may be recouped by the insured. Once the policy term has expired, there is no pay out if the individual insured is still alive.
Decreasing-term Life Insurance:
In decreasing-term life insurance, either the amount or the length of time that premiums are collected decreases for the time that the policy is effective. Once the policy term has expired, there is no pay out if the individual insured is still alive.
For example: if a person could purchase a decreasing-term policy of sixty units at $600/month that covers a period of 720 months or sixty years and the insured dies a month after the policy takes effect, the beneficiary would receive $600/month for 720, which is a lump sum of $432,000.
If the same insured dies after twenty years, the beneficiary would receive $600/month for forty years, which is a lump sum of $288,000.

Question 4

Advocate Networks, LLC, received a copy of a lawsuit against it by Marketing on Hold Inc. on March 23. Networks retained counsel to represent it in connection with the lawsuit on March 26 but failed to provide Hartford Fire Insurance Company, which had issued two liability insurance policies to Networks, with any notice of the event that prompted the lawsuit, the underlying claim, or the lawsuit itself until July 25. The policies required Networks to notify Hartford of any claim or lawsuit "as soon as practicable" and to "immediately" send it copies of any legal papers in connection with any claim or lawsuit. Hartford asked the court to declare that Networks was not covered under the policies with respect to the lawsuit or the underling claim. Networks said it had thought the dispute was a misunderstanding it could resolve by e-mail. It argued that no potential liability was indicated, so it did not have a duty to provide Hartford prompt notice. Is Networks covered?

Question 5

What is a double indemnity rider?

Question 6

Chase Insurance Life Annuity Company issued a one-million-dollar life insurance policy to Theresa Officer effective on February 11. Her husband, Dean Officer, was the beneficiary. Two years of premiums were paid, but one year, ten months, and twenty-four days after the policy became effective, Theresa committed suicide. Dean made a claim under the insurance policy, and Chase sent him $540, the amount of the premiums that had been paid. The policy stated that Chase would limit the "proceeds" paid under the policy if the insured committed suicide "within 2 years from the Date of Issue; and after 2 years from the Date of Issue, but within 2 years from the effective date of the last reinstatement of this policy." The "limited amount" was the premiums paid. Should the court limit Dean's recovery to $540?

Question 7

Why is it desirable for the insured to have a grace period in a life insurance policy?

Question 8

As Jonathan Adrabi drove out of a parking lot, he stopped behind another car at a stop sign. The people from the car ahead of him got out and assaulted him. They hit him with the barrel of a shotgun, forced him into his car trunk, and drove at high rates f speed, occasionally slamming on the brakes, which banged him against the trunk interior. Adrabi made a claim for his injuries under his Allstate Insurance Co. (Allstate) uninsured motorist (UM) coverage. The UM provision provided payment for bodily injuries the insured was entitled to recover "from the owner or operator of an uninsured auto. Injury must be caused by accident and arise out of the ownership, maintenance or use of an uninsured … auto." An uninsured auto under the policy was one that had "no bodily injury insurance policy in effect at the time of the accident." Allstate denied coverage and Adrabi sued, alleging that once under the control of the assailants, his car was uninsured. Should he recover?

Question 9

May a beneficiary assign a life insurance policy? Explain.

Question 10

What risk does a fire insurance policy normally cover?

Question 11

After being diagnosed with terminal lung cancer, Albert Lauer applied for life insurance with American Family Life Insurance Co. He did not disclose the diagnosis or that he had been treated with chemotherapy. Lauer paid the first premium on March 26, and American issued a conditional receipt. The receipt supplied temporary life insurance that ended at the earlier of 120 days or the date a policy was issued. American issued the policy on April 12. Lauer died two years and two days after the date of the conditional receipt, but before two years after issuance of the policy. The policy's incontestability clause stated the company would not contest its validity after it had been in force "for two years from … the [i]ssue [d]ate" Lauer's wife, Marilyn, submitted a claim under the policy, and American denied it because of Lauer's misrepresentation of his health. Marilyn argued that the two-year period began the date the company issued the conditional receipt. Did it?

Question 12

Why must property and its location be described accurately?

Question 13

Jones, Walker, Waechter, Poitevent, Carrere Denegre, LLP. stored business personal property with Records Storage Services Inc. (RSSI). RSSI stored it in a warehouse located at 900 Atlantic Street. The property was damaged. Certain Underwriters at Lloyd's of London was the commercial property insurer of RSSI. The Lloyd's policy stated that for contents or personal property to be considered covered property, a limit of insurance had to be shown on the declaration page of the policy. The only coverage relating to 900 Atlantic Street was (1) for the building itself, and (2) for business income. The declaration page of the Lloyd's policy did not reflect any coverage for contents or the personal property of others. Jones sued Lloyd's. Was Lloyd's liable?

Question 14

What does an 80 percent coinsurance clause in an insurance policy mean?

Question 15

What kinds of losses does an auto theft policy cover?

Question 16

What does automobile bodily injury insurance cover?