INSURANCE
101

February 17, 2016

1.  Overview: What We’ll Cover

• 
  Insurance
  Concepts
• 
  Common Terms
• 
  Types of Insurance
• 
  Anatomy
  of an Insurance Policy
  • 
    Analyzing
    a Claim/What We Do

2. 
Nature of Insurance

A.        What
Is Insurance?

• Definition: Insurance is a contract whereby one undertakes to
  indemnify another against loss, damage, or liability arising from a contingent
  or unknown event. (Ins. Code § 22)
• 
  Intent: Spreading risk

B.        What Can Be Insured?

• 
  Legal
  concepts (contingent events; insurable interest)
• 
  Types
  of Insurance – personal, commercial

C. 
The Insurer

• 
  Ins. Code § 23: One who
  undertakes to indemnify another by insurance.
• 
  Compare
  with Self-insurance
• 
  Regulation
  of insurers: California Department of Insurance

D.        Elements
of Insurance Contract

• 
  Insurance policy is a
  contract
  • 
    Policy
    specifies: parties; subject matter, risks, policy term, limits, premium

3. Insurance Concepts and Terms

A. Types Of Insurance

• 
  Primary
• 
  Excess
• 
  Umbrella
• 
  Reinsurance

C.        Underwriter

D. Policy Forms

• 
  ISO-What
  is it?
• 
  Manuscript Policie

E.        First-party
versus third-party claim

F. Adjuster / Claim handler

G. Records

• 
  Required to keep them
• 
  Claim File, log notes, investigation

H. Captive Insurance

I.          Fronting
policy

J. Self-Insured Retention / Deductible

K.        Reserves

4.
Parts Of An Insurance Policy

A. Declarations (Dec page)

B. Jacket

• Policy
  Forms
  
  Insuring agreement
• 
  Exclusions
• 
  Conditions
• 
  Definitions
• 
  Limits
• 
  Endorsements
  D. Coverage
  Provisions Required by Statute

5.         Handling
an Assignment

A. Who
is the client? (insurers part of corporate families, TPAs, etc.)

B. Who
else is involved and what is our client’s relationship to them? (claimant,
counsel, other parties)

C. Sources for
complete policy if not from client:

• 
  Client
• 
  Insured (should have original)
• 
  Broker
• 
  Agent
• 
  Reconstructing from other resources
• 
  What do we mean when a
  policy is “lost”?  What do we do in that
  situation?

D. What are we being asked to do? (coverage opinion,
litigation, monitoring)

E. Coverage evaluation – third party claim

• 
  Typically two aspects to policy:
• 
  Indemnity – covering
  insured’s liability for harm to others
• 
  Defense
  – defending lawsuits resulting from the insured’s conduct
  • 
    Notion
    of “occurrence” (versus claims-made
    coverage)
  • 
    Types of hazards typically
    covered
    • 
      Bodily
      injury
    • 
      Property
      damage
    • 
      Advertising
      injury
    • 
      Personal
      injury
    • 
      Coverage grant vs.
      exclusions
    • 
      Conditions
    • 
      Endorsements
    • 
      Duty
      to defend vs. duty to indemnify
    • 
      Reservation
      of rights
    • 
      Cumis or Independent Counsel

F. Coverage evaluation – first party claim

• 
  Many types: life, health,
  disability, property
• 
  Benefit
  not necessarily paid to insured, e.g.:
  • 
    Life -
    to beneficiary
  • 
    Health
    - to provider
  • 
    Fire - to mortgage holder
    • 
      Property
      insurance applies to covered
      property damaged by an insured peril
    • 
      Notice requirement,
      prejudice rule
    • 
      Proof of loss requirements
    • 
      Insured’s other duties
      after loss (policy conditions)
    • 
      allow inspection
    • 
      provide documentation
      (receipts, invoices, or other records)
    • 
      submit to examination under
      oath
    • 
      Limits on time to sue “on
      the policy”

G. Claims Handling

• 
  Tender
• 
  Investigation
• 
  Reservation
  of rights
• 
  Obligations when denying
  claim

H. Declaratory
Relief Action

• 
  Distinct from “underlying
  action”
• 
  Insurance Coverage not “relevant”
  in underlying action
• 
  Sole
  issue in DRA is benefits due under policy — i.e.,
  a contract action
• 
  Examples of issues: misrepresentation/concealment;
  application of exclusions

I. Bad
Faith

• 
  What is it? breach of
  implied covenant of good faith and fair dealing
  
  

6.         Coverage
Charts / Policy Charts

• 
  Distinction between the two
• 
  What information do they
  provide?
• 
  Examples