Insurance Law
What is Insurance Law?
Insurance law is the specific law that governs the insurance industry. The Insurance Law creates and regulates principles that will administer the practice of insurance sales, insurance agents’ licensures, policy writing, and claims processing.
The insurance law has two significant aims, which are to protect the consumer (policy holders) and the insurance company through the setting of limitations and restrictions as well as the creation of enforcement process should there be any violations of the law.
The main function of insurance is to allow people to be able to plan, prepare, and protect themselves financially against a particular adverse and unforeseen event should they undergo or suffer problems such as death, vehicular accidents, health matters, multiple business or home damage. In cases there is an absence of insurance, three possible individuals bear the load of a financial loss; the individual who suffered the loss; the individual who caused the loss as a result of negligence; and an individual who has been owed the load by the legislature.
What is Insurance?
Insurance is a form of risk management where risk is transferred from the person seeking to be insured to the insurance provider in exchange for a paid premium, this is the fee to be paid to the insurance provider for assuming the risk. A contract between the insurance provider and insured is an insurance policy, and the insured is indemnified against any claims covered by the policy. An insurance policy involves the parties which are the insurer and insured; the period of coverage; the scope covered; the premiums; particular events or losses covered, and the amount to be paid to the insured.
There are two types of insurance providers: life insurance companies, which sell life insurance, annuities and pensions products, and non-life or general insurance companies, which sell other types of insurance.
Coverage of Claims and Filing a Claim
A typical insurance policy includes specific set of standards that a policy holder must follow in order to receive any proceeds from their policy. These requisites usually incorporate guidelines for notice of a claim, promptness in filing of a claim, evidence of loss, assessment, and prevention of subsequent damage.
Bad Faith and Refusal of Claims
In some circumstances, claimants sue the insurer for improperly denying valid claims these are considered bad faith claims. An amalgamation of a tort and a contract claim result to action for a bad faith claim. This action is founded on a basic principle of contract law that there is an involvement of agreement of good faith and fair dealing on both sides of every contract.
Duty to Defend and Defense of Claims
It is common that insurance policies include a duty to defend clause. This clause pertains to the duty of the insurer to an insured party on condition that the result of action is contained in the policy. Failure of the insurance provider to uphold its duty to defend an insured party against a third party claim will result to liability for the damages.