I.

Adverse Selection
a. Imperfect knowledge of the information
b. Get an inapprptiate risky proposition
i. Example
1. Increase of moral hazard
II. Misrep
a. Falsely and intentionally made
b. Warranty
i. Fact not true
ii.If warranty is not maintained the no warranting party can
III. 4 Methods of Ins Contract Interp
a. Four Corners
b. Ambiguity then contra proferentum against the drafter
c. Amig more than then adhesion
d. Amibig is in the sit, doctirine of reasonable expectations
IV. Estopple/Waiver
a. Ins co is estopped from enforcing a clause because of behavior
b. Waiver is bargained for by both parties
c. Cannot estop coverage if not baragained for
V. Group ins
a. Underwriting cost are minimized b/c of the power of the group
b. ERISA
i. Fed control of benefit equalization
ii.Preemption of the business of insurance
VI. Coverage and Punitive Damages
a. Generally no coverage for punitive damages unless contracted for
b. Some state exceptions
i. Ie
1. South Carolina
VII. McCarren Fergusen Act
a. Public Law 15
b. Reserves to the states the business of insurance
i. Licensing of insurance participants
ii.Solvency of the insurance entities
iii.Approvla of files and rates
iv.Departmental rule making
c. Fed govt may intervene where they choose to regulate
VIII. Insurance regulation
a. See above
IX. Loss Ratios/Measurements
a. Permisibile descrimiantion
i. Old v. young
ii.Sick v. healthy
b. Impermissible discrimination
 i. Women v. men
ii.Black v. white
X. Business of Insurance
a. Royal Drug Standard
i. Spreads risk
ii.Intregal part of the contract
iii.Limited to the insurance industry
XI. Homeowners policy
a. Multi peril
i. Fire
ii.Flood
iii.Storm damage
iv.Includes
1. General coverage
2. Third party liability
a. If my property injures your property
b. NOT the insured’s work
c. NOT precluded by intentional acts
b. Certain standard clauses
i. Subrogation
ii.No Action Clause
1. Duty to defend not covered here
a. Triggered when the claim is made
b. Need not be true
XII. Property Insurance – Insurable Interest
a. Own the property
b. Contractual Interest
c. Legal duty to insure
i. Executor of the estate
d. Factual expectation of damage or loss
i. Suffering a specific obligation to pay a loss
XIII. Definition of Occurance v. Accident
a. Long term exposure claims
XIV. Claim Causation – Efficient Proximate Cause
a. Sequential
i. Problem occurs when
1. Efficient proximate cause
a. What caused the event sequence
b. Simutaneously
XV. Increase in Hazard Issues
a. If you create a situation that makes it more dangerous
i. Ie
1. Hazard increased beyone the scope
 a. House protected by spring loaded gun that catches
on fire
XVI. Measures of recovery
a. Actual Cash Value
i. Cost less than depreciation
b. Can buy replacement cost coverage
i. Replaces the spread
1. How to determine actual cash value
a. Market value
b. Replacement cost less depreciation
c. Totality of the cirucumjstances
XVII. Co-Insurance requirement
a. Insurance companies requiring to insure a certain value of the property
i. Will pay up to 100% of a partial loss up to what you insured
1. Ie
a. Law school need not insure for the total value of all
of the property
2. Formula
a. (Policy limit /( Co-insurance limit x actual cash
value)) x partial loss = recovery
XVIII. Subrogation
a. Where an insurance company where it paid its loss can get its loss
from a tortious third party
b. Insurance company stands in your shoes
c. Either
i. Contractual right
ii.Or equitable right
iii.OR statutory right
d. May not be insurance against the insurerers own insured
i. Insured cannot stand in the way UNLESS
1. ?
XIX. Equitable owner v.
a. Loss when both own the property?
i. Real estate insurance AND
ii.?
XX. Insurable Interest in Life
a. NO AMERICAN RULE
b. May insure your own life for as much or as little as you want
c. Can insured love ones generally (parents, children, spouses, potentially
business partners, or key person insurance in a business)
d. Defense of lack is that of the insurance company
i. Can deny coverage because lack of insurable interest
ii.The insurance company may choose to permit it
 1. So long as there is full disclosure and knowingly issue the
policy anyway and is still a valid contract
XXI. Changes in Beneficiaries – EXAM QUESTION
a. Want a fully registered change of beneficiaries
b. Only want what’s in the computer
c. Case Law says
i. Insured had to make a good faith attempt to change the bene
with a positive move forward to effect the change
XXII. Increase in Moral Hazard in Life Insurance
a. Impermissible
XXIII. Incontestability Clause
a. Defines the period where the insurance company can deny if there is a
misrepresentation
b. After this period then vested so long as payments are made
XXIV. Health Insurance – HIPPA
a. So long as valid HI no denial of coverage of preexisting conditions
b. Can deny for up to 12 months if a 12 month gap
i. COBRA will allow for the maintenance of your coverage
XXV. Health Care – Plan Obligations
a. Ability of the insurance company of the employer to change terms at
will
i. HH Music v. McMahon
1. So long as it is not discrimination
XXVI. ERISA Preemption
a. If insurance is offered as a benefit of employment ERISA remedies
apply
i. Generally only the cost of the treatment
ii.Encourages the employer to provide benefits fairly
XXVII. Coordination of Health Insurance Benefits
a. If more than one ins co, which is the primary policy?
i. Not a pro rata sharing generally
ii.Employees go first then spousal
XXVIII.Bad Faith
a. A penalty that the insurance company may be assessed for a failure of
the ins co to pay what the should have paid when they were supposed
to pay
i. Including duty to defend and duty to indemnify
b. Asking the court for a tort violation otherwise there is only the value of
the K
XXIX. CGL Policies
a. Duty to defend
i. Same as in the liability of the property liability K
ii.Very large, not confined by the policy limit
iii.May have a duty to appeal
 1. Will be triggered if the claim COULD be covered, need
only allege this
XXX. CERCLA Defined
a. Polution damage
i. Joint and several liability
ii.Insuring for such losses is difficult
b. 3 Forms of Coverage
i. Gov’t repairs and charges
ii.Gov’t forces you to repair
iii.Gov’t tells and you repair on your own
XXXI. Occurrences/Triggers
a. Long Term Exposure Claims
i. 4 Theories
1. Exposure to the pollution, asbestos, the danger
a. Triggers the oldest policies
b. When did it first occur
2. Manifestation of loss or injury
a. Triggers policies that are most recent
b. When the result happened
3. Injury in Fact
a. Scientific point where the damage is irreversible
that the loss will occur even though the loss hasn’t
happened yet
4. Judicial Continuous Trigger
a. Each policy will share in the loss proportionately in
the loss of the number of years
XXXII. Intentional Act Exclusions
a. Will not be covered for intentionally causing the result
XXXIII.Business Act Exclusions
a. Exclusion from Commercial General Liability Policy
i. Homeowners policy excluding business acts
ii.Can be limited to only while completing the task NOT the
products
1. Products liability v.
XXXIV.Late Notice Defenses
a. Giving notice of loss as soon as practicable
b. If not, then ins co may deny coverage if they can prove they were
harmed
i. Duty to defend was significantly impinged
XXXV. Claims made Policies
a. Moves from occurance phase to when was the claim reported
i. Gives underwriter a smaller window of risk
ii.Can effectively write the policy at a reasonable cost
1. Ie
 a. Med Mal Ins
b. Prod Liab Ins
c. Mal Ins
2. Can be converted
XXXVI.Tripartite Conflict
a. Conflict by insured, hired defense attorney, and insurance company
i. Insured is client-> attorney client priv
ii.Ins co hires attorney
iii.Attorney cannot disclose even invalidated language
XXXVII.Duty to settle Reasonably
a. If an offer is made within the policy limits then must settle unless an
reasonable ins co would not have settled
XXXVIII.Auto Policy
a. Omnibus Clause
i. Owner and their household are insured unless specifically
excluded
ii.Additional drivers may be given permission to drive and will be
covered
1. Should be direct, not a permitee’s permitee.
2. Cannot be too attenuated
3. Cannot be given retroactively
4. Can be given implicitly
5. The scope can be important (changes by jurisdicition)
a. Some broad
b. Some narrow
iii.Will cover named insured while driving other cars
1. Primary coverage is the car
2. But if guest, I can make up coverage
XXXIX.Financial Resp Clause
a. Must have proof that can indemnify
i. Generally min insurance
ii.Can be very wealthy and cover it
XL. Scope of Permissive use
a. See above
i. Limited
ii.Broad
iii.Somewhere in between
XLI. Use of a Vehicle
a. Must be related to the use
b. Not to attenuated
XLII. KNOW
a. Hionis AND Standard Venetian
b. Formula