SC Insurance Law

julianknox5's version from 2015-07-09 19:25


Question Answer
Adjusterindividual who determines extent of the insured’s losses and assists in settling or attempts to settle claims against an insurer for benefits.
Agentindividual who represents an insurance company and must be licensed. ( agent = producer / Insurance agent = insurance producer)
Applicationform provided by an insurer that a prospective insured completes in order to apply to the insurer for issuance of an insurance policy.
An application is considered to be…an offer that needs acceptance by an insurer to form K relationship.
A negligent delay in either acting upon an application for insurance or notifying the applicant of rejection will sustain liability on whom?The insurer based on theory of implied acceptance of applicant’s offer.
BeneficiaryRecipient of some benefit from an Insurer pursuant to an insurance policy.
Bindertemporary insurance K that provides proof of coverage until a permanent policy is issued.
Conditional binderan interim K of temporary insurance coverage at least until the insurer issues the insurance policy or declines to issue policy.
Cancellation (accident & health ins.)terminating an insurance policy at a time other than the premium due date or the policy’s anniversary date.
Cancellation (auto)termination of an insurance policy during the policy period.
Cancellation (property)on a date other than its date of expiration.
Claimrequest made by an insured to an insurer to obtain a benefit for some type of loss purportedly covered by the insurance policy for which the policy may provide.
Coinsurancestipulation that an insured undertakes to be the insured’s own insurer to the extent that the insured does not maintain insurance in a given percentage of the value of the property damage or loss.
Clauseinsurance policy provision
Deductiblesum of money that an insured pays an insurer in order for the insurer to pay on a claim for some type of loss covered by the insurance policy.
Exclusiontype of provision in an insurance policy specifying what type of loss is not covered under the insurance policy.
Insurable Interesta financial interest in some person or property for which an insured seeks insurance coverage of liability for the loss of the person or property.
Insurercarrier who engages in surety or the business of insurance.
LapseWhen coverage ends as a result of premium nonpayment. If reinstatement of the insurance policy does not occur, termination of the policy may result.
Licensedocument issued by the director of the SC department of Insurance authorizing a person to act as an insurance agent.
Ownerinsurance policy holder.
Occurrencean event of loss that happens which an insurance policy could cover.
PolicyContract of insurance
Premiumpayment given in consideration of a contract of insurance.
Proceedssum of funds payable by an insurer to an insured or a beneficiary pursuant to an insurance policy such as a life insurance policy.
Accident insuranceinsurance of people against personal injury or death by accident
Health insuranceinsurance of people against ailment, sickness, and any type of physical disability resulting from disease or accident, and prepaid dental service, but EXCLUDING COVERAGE required by SC Workers’ compensation law.
Casualty insuranceeach insurance against legal liability of an insured for bodily injury to or death of another person, including workers’ compensation insurance, and for damages to or loss or destruction of the property of another person. (ex. workers comp)
Workers’ compensation insuranceinsurance purchased by an employer from an insurer who pays specified types of benefits to employees who suffer job-related injuries or certain relatives of an employee who survives an employee who dies from job- related injuries.
Life insurancecontract of insurance upon the lives of people
Marine Insuranceinsurance against loss or destruction of or damage to aircraft, vessels, or watercraft and their cargoes.
Legal professional liability insuranceis insurance protection against the legal liability of the insured and against damage, loss, or expense incident to a claim arising from representation of or legal service to a person as the result of malpractice.
Medical Malpracticeprotection against legal liability of insured for failing to provide professional service by a licensed health care provider, licensed physician, or hospital.

Insurance Agents

Question Answer
All insurance, contracts on property, lives or interests in SC are subject to.. South Carolina Law
An insurance agents does what for the insurer?Solicits, sells, or negotiates insurance for an insurer.
An agent provides notice that….the agent will transmit or receive insurance applications or policies
Who is to receive, collect, or transmit an insurance premium payment?an insurance agent
What is the duty of an insurer’s agent?to exercise good faith, reasonable judgment and skill, care, and diligence to properly complete an insurance application, explain the limitations and terms of coverage, and handle and tender the initial premium payment.
What happens when the agent does not abide by his duty?he can become liable to the principal
Will the insurer be liable for the agent’s acts beyond the agent’s authority?Yes, UNLESS the insured received actual or constructive notice (apparent authority will be eliminated if notice is given).

Insurable interests

Question Answer
What is an insurable interest?When an insurer only provides insurance coverage for the benefit of PEOPLE (includes insurer but not exclusive) who have an interest in the insurance coverage’s subject matter such as a person’s life, health, auto, or other property. (spouse, children interest in father/husband).
Does a person have an insurable interest when their only right arises under a contract that the person lacked authority to make?no
Insurance K is void from inception when….insurable interest do not exist when the contract is made.
Someone who has an insurable interests may do what?purchase an insurance policy on an individual person’s life.
Can a stranger buy a policy to insure your life, explain?No, because no insurable interests if person is not an immediate family member. However, institutions or people who become a person’s creditor may have an insurable interest on the person’s life or key employee or business partner.


Question Answer
What rule of exclusions does SC follow?an insurance exclusion does not limit coverage UNLESS the exclusion is “causally related” to the loss.
What must an insurer do to effect an exclusion?Insurer must show a “causal connection” between a loss and an exclusion before the exclusion will limit coverage under the policy.

Equitable Estoppel

Question Answer
If an insured is misled by the insurer into believing that the insurance coverage includes the risk and/or loss what may the insured do?the insured may contend that the insurer is equitably estopped from denying coverage of a particular risk and/or loss.
Under SC law who has the burden of proof when it comes to equitable estoppel?Under SC law the burden is divided between the estopped party and the party claiming estoppel.
What are the elements of the estopped party? (1) conduct amounting to false representation or concealment of material facts inconsistent with the party’s subsequent assertions; (2) intention or expectation that such conduct be acted upon by the other party; and (3) actual or constructive knowledge of the real facts.
What are the elements of the party claiming estoppel?(1) lack of knowledge or means of acquiring true facts; (2) reasonable reliance on the other party’s conduct; and (3) a prejudicial change in position.

Collateral Source Rule

Question Answer
Compensation received by an injured party from a source wholly independent of wrongdoer should not…be deducted from the amount of damages owed by the wrongdoer to the injured party.
What does the collateral source rule apply to?Insurance proceeds.

Policy Clauses

Question Answer
What types of insurance policies may include a loss payable clause?Property or automobile
What is a loss payable clause?Provision involving TP in addition to the insured and insurer which may operate to place these TP in the position of additional insureds even if the insurance policy MAY NOT EXPRESSLY designate them as such.
Purpose of loss payable clauses in insurance contracts serve to protect …..the interests of certain third parties (e.g., Lienholders or mortgagees) in the insured property.
What two types of loss payable clauses are recognized in SC?1) open mortgage clause; and 2) standard clause.
Open mortgage clause means that…The named TP loss payee does not recover in the event of loss as the insured party but as a beneficiary under the policy in the right of the insured. However, an insured’s misconduct bars recovery by the lienholder.
Standard clause provides thatthe interest of the mortgagee only, shall not be invalidated by any act or neglect of the mortgager or the owner.