Insurance Law can

Intro to Insurance Law

• 
  Grew out of maritime law in the past as ships were used for commerce, and ships occasionally sank leaving the owner without his shirt
  
• 
  Peril: anything that creates a loss
  
• 
  Underlying insurance is the idea of fortuity
  
• 
  Basis of insurance is risk-spreading, i.e. sharing of the loss amongst those who buy insurance, so the many cover the costs of harm to a few
  

• 
  Claim: as a general rule for a claim to be made, there must be some form of communication of a demand for compensation or other form of reparation by a third party on the insurer, or at least a communication by third party to insurer of a clear intention to hold insurer responsible for damages (McLachlin CJC, in Jesuit Fathers)
  
• 
  Exclusion:
  

Insurance Providers & Consumers

• 
  Insurer: in the business of making profit
  
• 
  Insured: main consumers of insurance products. Receive a promise that future losses suffered by them will trigger their insurer’s duty to pay
  
  • 
    Not necessarily the ones who receive insurance money, but are the ones whose liability are covered by the contract
    
  • 
    Given an assurance that with respect to the future, a guarantee that if certainf acts materialize, financial compensation will be provided
    
• 
  Unnamed insured: third party beneficiaries, a person who comes within a class description included within a policy and to whom assurances are extended
  
  • 
    Outside of a contractual relationship, e.g. employees often benefit from extended health coverage under group insurance contracts signed by employer
    
• 
  Named insured: actual parties to respective insurance contract, individuals that voluntarily purchase insurance for their own benefit or for benefit of third parties
  
• 
  Beneficiary: someone who is designated by the insured to receive insurance money
  

Intermediaries

• 
  Agents: the legal standing of a person who acts on behalf of someone else, or a particular intermediary involved in the distribution of insurance
  
  • 
    Works for the insurers
    
• 
  Brokers: sell products of several different insurance companies, act as advisers, counsellors and consultants who play a role in decision-making process itself. Present their clients with wide range of products and quotations based on individual needs and circumstances.
  
  • 
    Works for the insured
    
• 
  Underwriters: the person within an insurance organization whose responsibility it is to assess risks and recommend either their acceptance or rejection
  
  • 
    Closely allied with actuaries
    
• 
  Adjusters: they investigate claims and negotiate settlements, work in house within insurance company
  
  • 
    Principal responsibility to the insurer
    
• 
  Examiner: work for insurance company and are experienced in deciding how to handle a claim
  

Products

• 
  Risk: a fortuitous event, something that may or may not happen
  
• 
  Object: the individual or property that must suffer a loss or damage in order for the policy to apply
  
• 
  Peril: the cause of the loss or damage
  
• 
  Indemnity: the insured is entitled to be indemnified up to the amount of their actual loss
  

• 
  Reserve: company must determine what the loss is valued at
  
• 
  Underwriting losses: the total claims and expenses incurred surpassing premiums earned for the same period
  
• 
  Policy: the instrument evidencing a contract
  
  • 
    Contract: a contract of insurance and includes a policy, certificate, interim receipt, renewal receipt or writing evidencing contract whether sealed or not, and a binding oral agreement
    
• 
  Notice
  
• 
  Proof of loss
  
• 
  Exclusion
  
• 
  Exception to exclusion
  
• 
  Certificate of insurance
  
• 
  Coverage
  
• 
  Coverage binder: promise by underwriter to provide coverage
  
• 
  Declaration pages
  
• 
  Renewal v. original application for insurance
  
• 
  Material
  
  • 
    Kehoe, BCCA: materiality imports an objective test of whether any prudent insurer in the normal practice of the insurance business would be influenced whether to accept or decline the risk or stipulate a higher premium
    
    • 
      Materiality is a question of fact
      
• 
  Re-insurance: insurance for insurers, a special product designed to shelter insurers from widespread losses
  

• 
  When a loss occurs, usually insurance broker is phoned first, broker sends notice of claim to the insurer, someone in claims dpt will pick it up
  

• 
  Occurrence based policy: if occurrence happens within the policy period, it will be covered
  
• 
  Claims made policy: depends on when claim is filed
  

• 
  Insurance: predication compensation on fact that loss is random
  

Life & disability

• 
  Deals with insurers damages to a third party to the contract
  
• 
  CGL:
  
  • 
    Against liability for bodily injury and damages, not usually for damages due to the negligence of professionals.
    
• 
  ENO:
  
  • 
    Errors & omissions: malpractice insurance.
    
  • 
    Usually spread the risk, as risk pool is similar, the risk can be assessed more accurately. (i.e. know what types of mistakes DR.’s might make).
    

• 
  DNR:
  
  • 
    For directors & officers who have caused losses to their corporations through negligence.
    
• 
  Wrap-up liability:
  
  • 
    Covers trades on a construction site.
    
• 
  Hybrid: first party liability & 3^rd party.
  
  • 
    Homeowner’s policy
    

Property & casualty

• 
  First party insurance
  
  • 
    Underwriters will assess the likely hood of certain events.
    

1. 
   Fire insurance:
   
   1. 
      Most basic, started as fire and extended, does not cover burglary.
      
   2. 
      Commonly now called the mutli-peril policy
      
      1. 
         Only covers the named perils.
         
      2. 
         Thus named-peril policies.
         
2. 
   All risks:
   
   1. 
      Covers everything but the named perils
      
   2. 
      Many claims hear where INSRD thought it was this kind.
      
3. 
   Course of Construction:
   
   1. 
      Insured for only the anticipated time of construction.
      

• 
  Takes a lot of its rules from contract law, legal analysis will first look at contract as a whole
  
• 
  But also rules and principles of general application
  
  • 
    Statute
    
  • 
    Regulations
    
  • 
    Case law
    
  • 
    Conventions in industry
    
  • 
    Fundamental legal and equitable principles
    

• 
  Indemnity insurance: payment in event of proven financial loss consequent upon property damage or PI
  
• 
  Non-indemnity insurance: payment upon occurrence of a specified event regardless of whether it entails financial loss
  

• 
  Reasonable expectation principle: govern interpretation of contract. Court should give effect to reasonable expectation of parties, court should be loath to support a construction which would either enable the insurer to pocket premium without risk, or insured to achieve a recovery which couldn’t be anticipated at the time of contract (Jesuit Fathers of Upper Canada, 2006)
  
  • 
    s.32 of Act use “unjust” and “unreasonable”
    
  • 
    Another example of reasonable expectation principle is KP Pacific
    
• 
  Look to policy terms first
  
• 
  Duty of utmost good faith: applies to insurer and insured
  
  • 
    For insured, in negotiating contract of insurance, must exercise utmost good faith that it has disclosed to insurer or broker what is materially at risk
    
  • 
    For insurer, must conduct itself openly, honestly, and without unreasonable delay
    
• 
  Indemnity: no more than the actual loss be paid, claimant cannot profit from insurance
  
  • 
    E.g. insured stands to be indemnified for financial loss from damage to property, or from liability to pay damages to somebody, or personal injury they may suffer
    
  • 
    Follows from this principle that insured must not keep both insurance money it gets and proceeds of suit taken against negligent tradesperson
    
  • 
    E.g. insured cannot get value of destroyed item, and keep it for resale, that salvage goes to the insurer
    
• 
  Subrogation: insurer steps into insured’s shoes, takes what insured is entitled to get from wrongdoer to prevent double compensation
  
  • 
    Insured must be made whole before insurer can collect money
    
• 
  Fortuity principle: losses covered must be random. Insurance contracts are presumed to cover neither losses certain to occur (wear and tear), nor losses deliberately caused (arson)
  
  • 
    Losses intentionally set are considered as matters of fundamental insurance principle, not to be covered
    
  • 
    Greece, SCC: standard mortgage clause gives mortgage company the status of having its own contract of insurance with that same company
    
  • 
    Purely Fortuitous Blameless event  Negligent act  Grossly Negligent  Reckless act  Action intended to cause loss
    

• 
  Insurable interest: judge presides over insurance case, takes a long time to give a decision, can insurance company get life insurance on the judge’s life to compensate them for the cost it would take to re-try the trial if the judge dies (***potential exam question***)
  
  • 
    Bilkey thinks could likely get insurance on judge because of potential monetary loss of running another trial