Law Summary
Insurable Events and Parties
- Events that may cause damage or liability to a person with insurable interest can be insured.
- Married women and minors over 18 may independently insure their own lives or those of their children.
- Insurance covering lotteries is prohibited.
- Any person or entity authorized under the Code may be an insurer.
- Any person except a public enemy may be insured.
- Insurance by a mortgagor benefits the mortgagor even if payable to a mortgagee, with act implications.
Insurable Interest
- Defined to include interests in life, health, property, legal obligations, and expectancy based on existing interests.
- Insured may change the beneficiary unless waived.
- Beneficiary depriving insured of life forfeits interest.
- Contingent or expectant interests without actual rights are not insurable.
- Insurable interest must exist when insurance takes effect.
Concealment and Representation
- Concealment is the failure to communicate material facts which may render contract rescindable.
- Both parties must disclose material facts known to them.
- False representations can lead to contract rescission.
- Representations cannot override express contract provisions.
- Representations may be oral or written and must be truthful.
Insurance Policies
- A policy is a written instrument defining the contract.
- Policies must contain key elements: parties, amount insured, premium, subject matter, risks, and period.
- Cover notes temporarily bind insurance pending policy issuance.
- Policy proceeds must benefit the person insured or specified beneficiary.
- Policies may be open, valued, or running.
- Cancellation rules: prior notice required except for life insurance, valid grounds must be stated.
Warranties in Insurance
- Warranties can be express or implied, relating to factual or future conditions.
- Express warranties must be included in the policy.
- Violation of material warranties entitles rescission.
- Breach without fraud exonerates insurer from liability from the breach onward.
Premium Payment
- Premiums are payable when the risk is exposed.
- Policies are not binding without premium payment, except life policies with grace provisions.
- Insured may get premium return under certain conditions such as no exposure to risk or surrender.
- Over insurance leads to ratable premium returns.
Loss and Notice
- Insurer liable if insured peril is proximate cause of loss.
- No liability for loss due to willful act of insured.
- Prompt notice of loss is required; delays may be waived.
- Sufficient evidence of loss includes police reports and medical certificates.
Double Insurance and Reinsurance
- Double insurance means multiple policies on same interest.
- Payments must consider over insurance and insurers contribute ratably.
- Reinsurance is contracting a third party to insure the insurer's risks.
- Full disclosure to reinsurer required.
Classes of Insurance
- Marine insurance covers risks of navigation, transit, related properties, and liabilities.
- Fire insurance includes fire and allied risks; modifications increasing risk without consent permit contract rescission.
- Casualty insurance covers accident and liability insurance except fire and marine.
- Suretyship guarantees performance of obligations with joint liability limited to bond amount.
- Life insurance covers human lives and related benefits; policies can be transferred or inherited.
Insurance Business Regulation
- Defines insurer types including domestic, foreign, and professional reinsurers.
- Requirements for organization, capitalization, licensing, and commissioner qualification oversight.
- Minimum paid-up capital and reserve requirements set.
- Filing and registration requirements specified.
- Solvency margin and assets admitted for financial assessment.
- Investment restrictions include allowable securities and property.
- Reserve liabilities must be actuarially determined with commissioner approval.
- Limitations on risk retention and reinsurance rules apply.
Insurance Operations
- Annual statements and reports required; public synopsis mandated.
- Policy forms and certain contract provisions must be commissioner-approved.
- Cancellation and renewal notifications and procedures specified.
- Licensing and regulation of agents, brokers, adjusters, underwriters, and actuaries enforced.
Claims Settlement
- Insurers must pay claims promptly and fairly.
- Penalties for unfair claims practices.
- Claims adjudicated by Commissioner with appeal rights.
Insurance Company Oversight
- Examinations and audits mandated regularly.
- Authority to suspend, revoke, or conserve companies lacking solvency or compliance.
- Liquidation procedures outlined under insolvency.
Mergers, Consolidations, and Mutualization
- Procedures and approvals for merging or consolidating insurance companies.
- Conversion of stock life insurers to mutual companies under commissioner supervision.
Security Fund
- Established to cover claims from insolvent insurers.
- Fund contributions required proportionate to net worth.
- Separate life and non-life accounts maintained.
- Fund administration and penalties for non-compliance established.
Compulsory Motor Vehicle Liability
- Mandatory insurance coverage for operators and owners of motor vehicles.
- Defined minimum coverage limits based on vehicle type and capacity.
- Procedures for registration linked to insurance proof.
- Claims paid without proof of fault but capped in total compensation.
- Enforcement and penalties for violations enumerated.
Mutual Benefit Associations and Trusts
- Defines mutual benefit associations and relevant regulation.
- Licensing, guaranty fund requirements, membership certificates, and reserves mandated.
- Examination powers of the Commissioner over associations.
- Mutual benefit associations may convert to mutual life insurance companies.
- Trusts for charitable uses require registration and supervision analogous to mutual benefit associations.
Insurance Commissioner Powers
- Exclusive regulatory, licensing, administrative, and adjudicatory powers.
- Authority to enforce laws, issue orders, impose sanctions including fines and suspensions.
- Power to adjudicate claims up to certain amounts with appeal mechanisms.
Fees and Funding
- Schedule of fees for licenses, certificates, examinations, and applications.
- Insurance Fund to cover Commission expenses beyond fees through premium taxes.
Miscellaneous Provisions
- Penalties for violations of the Code.
- Prescriptions for criminal actions.
- Transitional provisions for existing licensees.
- Repeal of inconsistent laws and validity of separable provisions.
- Immediate effect of the Code.