Insurance--05Liability Insurance

Front 1

generally

Back 1

customary for liability insurer to include a clause giving insurer both the riht and an obligation to take over any defense of any cause of action brought by a 3P against the insured on any coa that falls within policy coverage "even if any allegations of the suit are groundless, false, or fraudulent.

Front 2

Duty to Defend-
Exclusive Pleadings Test

Back 2

An insurer has a duty to defend a named insured only if the facts in a complaint against the Insured bring the claim within the policy coverage even if false, groundless or fraudulent

Front 3

Punitive Damages

Back 3

practically never assessed for mere negligence. Deliberate conduct prevents coverage b/c intentional. Thus punitive damages are only insured in cases of gross negligence or wanton and reckless conduct on the part of the insured.

Front 4

Punitive Damages--policy reasons for insuring

Back 4

1. thin line between negligence and gross negligence thus insuring against gross negligence no more increases the kin of coduct than the insuring of compensatory damages increases the incidences of negligence.
2. jurors know that any punitive award will be paid bc it is insured
3. court's respect for the freedom to K that exists between insurer and insured

Front 5

COnflicts of interest affecting insurer's duty to defend

Back 5

1. collusion bt insured and 3P
2. when conduct of insured could be intentional or negligent

Front 6

duty to defend--ambiguous claims

Back 6

as long as there is a potential for coverage, the insurer is obligated to defend. Some courts place burden on the insurer to conduct a reasonable investigation as to coverage and if such a reasonable investigation would disclose facts dictating coverage, insurer obligated to defend.

Front 7

duty to defend-multiople causes of action

Back 7

if a 3p claimant joins other causes of action that do not fall within policy coverage, this does not remove the obligation of the insurer to defend the coas that do fall within coverage of he policy

Front 8

dtd--intentional torts

Back 8

no duty to defend
-see doctor accused of sexual assault.

Front 9

payment of policy limits and the duty to defend

Back 9

duty to defend is separate and distinct from the duty to pay a judgment rendered against the insured.

insurer's tendering of policy limits does not relieve the insurer from duty to defend.

Front 10

dtd--insurer's remedies for failure to defend

Back 10

insured can recover--all costs and attys fees, including witness fees, court costs, appellate bonds and other appellate costs, as long as they are REASONABLE.

2. insurer may be liable for judgments/settlements up to policy limit or for the full settlement/judgment amount depending on the court.

3. additional damages for harm caused by breaching DTD such as mental suffering

4. insurer;s unjustified refusal to defend relievs the insured from policy obligation to forward insurer proof of loss, notice of incident or any other papers connected with the suit.

Front 11

Methods of Self-Protection for the Insurer in defending the insured

Back 11

1. Declaratory Action
2. Nonwaiver Agreement
3. Reservation of Rights Notices
4. Set-Off Benefits (but not worker's comp)

Front 12

Declaratory Action

Back 12

-safest for the insurance company
-provides a safe determination of any issues that coul be determinative of coverage or of its obligation to defend

Front 13

NonWaiver Agreement

Back 13

never sign one
insurer agrees to continue with the defense, while the insured agrees the insurer shall retain the right to contest any issues relating to coverage in the event of liability of the insured.

Front 14

Set-Off Benefits

Back 14

insurer can offset amounts that an employee receives under worker''s comp ins against those it paid

Front 15

Reservation of Rights Notices

Back 15

a unilateral statement by insurer in writing notifying the insured of the insurer's intention to continue with the defense while retaining the right to press all issues that could lead to a finding of noncoverage

-fairly weak document

Front 16

insurer's control of defense

Back 16

has both the responsibility for the defense and the right to control the defense.

Front 17

Duty to Advise

Back 17

Insurer has NO duty to advise the insured, but if an Agent nevertheless does he must exercise due care.

Agent may expressly or impliedly assume the duty of care.

Acts of agents may bind insurer under the doctrine of apparant authority

Front 18

Test for Implied Undertaking

Back 18

An implied undertaking will be shown and imputed to insurer if:
1. The agent received consideration beyond mere payment of the premium;
2. The insured made a clear request for advice; or
3. There is a course of dealing which would put an objectively reasonable agent on notice that his advice is being sought and relied on.

Front 19

Reformation of policy due to invalid enforcement

Back 19

? p.112

Front 20

reformation due to mutual mistake on customer coverage.

Back 20

? pp.31-32

Front 21

negligent misrepresentation of an insurer

Back 21

Generally insured may NOT complain of fraud in the misrepresentation of the contents of the policy when the truth could have been ascertained by reading the instrument
Exception: When the Insured is dealing with the Insured’s own Insurance Agent and inquires as to the specific terms / provisions of the policy, and reasonably relied upon the Agent, the Insurer MAY be liable for loss even if the actual written language of the policy excluded the coverage which the Agent alleged the policy provided

Front 22

misrep of insured REVIEW [life insurance]

Back 22

Test for Life Insurance & Fraudulent Misrepresentation 1. The falsity of the statement challenged
2. The falsity was known to the applicant
3. It was material to the risk
4. The carrier relied on the statements
5. They were made with the intent to deceive and defraud the company; and
6. The insurer must challenge the truthfulness of the application during the first 2 years of the policy or during the life of the insured

Front 23

Renewals

Back 23

If an insured does not accept a renewal offer, then the insurer dos not have to provide insured with a notice of nonrenewal.

unless an insurance policy provides otherwise or in the absence of a statutory requirement, there is no legal duty on the insurer to renew a policy.

--insurer cannot nonrenew a homeowner's policy in retaliation for a claim predicted on an act of god.

--insurer can nonrenew based on a determination that the property did not meet minsurer's underwriting guidelines. i.e. discovering that a home is located in a flood zone.

Front 24

doctrine of apparent authority

Back 24

P is bound by the acts of his agent when he has placed the agent in such a position that persons of ordinary prudence, reasonably knowledgeable with the business usages and customs, are led to believe the agent has certain authority and they in turn deal with the agent based on that assumption.