37.1 Law for Business, 15e by Ashcroft Chapter 37: Principles of Insurance Law for Business, 15e, by Ashcroft, © 2005 West Legal Studies in Business, a Division of Thomson Learning

37.2 Chapter 37 Objectives  Identify important terms used in insurance.  Explain who may obtain insurance.  List the five aspects of the law of contracts that have special significance for insurance contracts.

37.3 Insurance Terms  Insurance - a contract that transfers risk of financial loss for a fee.  Insurer - the company issuing an insurance policy.  Insured - the person protected against loss.  Beneficiary - the person who received the proceeds of life insurance policy.

37.4 More Insurance Terms  Policy - a written contract of insurance.  Premium - consideration paid by the insured.  Risk or peril - danger of loss.  Hazards - factors contributing to risk.

37.5 Types of Insurance Companies  Stock companies  The original investment was made by stockholders with a board of directors conducting business.  Mutual companies  Policyholders are the members and owners.

37.6 Who May Be Insured?  Judicially declared insane persons normally cannot contract for an insurance policy.  A minor may not assert that insurance is a necessity and contract for it.  Ordinarily, a next-door neighbor would not have an insurable interest in you unless that neighbor would somehow incur a financial loss because of you.

37.7 Insurable Interest in Property Explain how each of the following could have an insurable interest in someone’s property: Mortgagor Lender Partner Bailee Activity

37.8 Legal Aspects of Insurance  Concealment is the willful failure to disclose pertinent information.  Representation is how something is presented. False representation is a misstatement of a material fact by the insured prior to the finalization of the contract. Insurance Policy

37.9  Warranty is a statement or promise of the insured that relates to the risk and appears in the contract.  Subrogation is the right of the insurer under certain circumstances to assume the legal rights of the insured.  Estoppel is when one party leads the second to a false conclusion that the second parties relies upon. Legal Aspects of Insurance

37.10 The End Do you understand the concepts in this chapter? Insurance Policy