Walker Morgan LLC

Insurance Contracts

Insurance Contracts

At its most basic level, insurance is a contract between an insured and an insurer, typically an insurance company. A written insurance policy is a legally binding document that describes the obligations that the insured has to the insurer (payment of premiums, duty to report claims, duty to cooperate, etc.) and the insurer has to the insured (obligation to pay valid claims, duty of good faith, duty to respond to insured’s communications, etc.) If either party violates their obligations under the contract, it potentially relieves the other party of their obligations and, in some cases, exposes the violating party to a lawsuit. While insurance policies can vary in form, the standard components to an insurance policy are described below.

Declarations

The declarations section is a broad overview of the insurance policy. It contains the insured’s name and address as well as the contact information for the insurer. It further includes the dates that the policy is effective for, the amount and type of insurance coverage being provided, the amount that the insured must pay in premiums, any discounts being applied, and any applicable deductibles.

Depending on the type of insurance being offered—for example automobile and property insurance—the declarations section should also describe what is being insured through either a property description or a list of covered items.  If the policy includes endorsements (discussed below), they should also be listed in this section.

Definitions

In a contract, words are given their ordinary meaning unless they are specifically defined within the contract. Insurance agreements often include extensive definition sections which help to specify exactly what is covered under the agreement. For example, many automobile insurance policies provide coverage for the vehicle listed on the policy in addition to other “covered autos.” Covered autos often include “temporary substitute autos.” A classic example of a temporary substitute auto is a rental vehicle while the primary vehicle is being repaired or while on vacation but only if the rental is for less than 30 days. If the rental is for more than 30 days, it may fall outside of the definition of a temporary substitute auto and may not be covered. Understanding the definitions of the terms within a contract agreement is crucial to understanding what coverage an insured is paying for.

Insuring Agreement

The insuring agreement provides a more complete statement of the coverages that were set out in the declarations section. Insurance agreements can be broken into two categories, named-perils and all-risk. A peril is a cause of loss, for example fire or theft.

Named-perils coverage specifically lists the types of perils that are covered under the policy. If a peril isn’t named in a named-peril insuring agreement, the insured is not covered against that type of peril. For example, if a named-peril policy does not specify vandalism as a covered peril then the insured is not covered from damage caused by vandalism. This type of policy puts the burden of proof onto the insured to demonstrate that a claim was caused by a covered peril.

All-risk coverage lists the types of perils that are excluded from the policy. If damage occurs for any other reason than one specifically listed, it is covered.  A common type of insurance that uses all-risk coverage is a life insurance policy. Because all-risk coverage is more broad than named-peril, it typically has higher premiums. This type of policy puts the burden of proof onto the insurer to prove that a claim was caused by an excluded peril.

Conditions

The conditions section fully sets out the obligations of all involved parties. Under this section, the insured can determine what duties they owe to the insurance company in order to stay in compliance with the insurance contract. Other than paying premiums, the insured’s two primary duties are the duty to report claims and the duty to cooperate with claim investigations.

The duty to report claims requires the insured to notify the insurance company when the insured seeks to claim a covered loss. Oftentimes this notice can be provided over the phone, but some policies require written notice. Notice should include both the damage being claimed as well as the cause of that damage.

The basic purpose of the duty to cooperate is to prevent collusion between the insured and the other party or parties involved. In order for an insurance company to deny a claim for a failure to cooperate in many jurisdictions, the insured’s non-cooperation must have substantially prejudiced the insurer’s ability to resolve the claim.

The conditions section also commonly includes procedural information. This can include how notice should be given, how settlements with other insurances are handled, and cancellation requirements for either party.

Exclusions

Exclusions specifically limit the extent of an insured’s coverage under particular conditions. They may be broad, like the exclusions listed under an all-risk policy, or more narrowly tailored, like a named driver exclusion. A named exclusion restricts coverage on a vehicle in the situation that the excluded driver is operating the vehicle. This is a fairly common exclusion that is often used to exclude a high-risk household member and therefor lower premium rates.

Endorsements

Endorsements can modify a policy by adjusting or deleting other sections already included in the insurance contract, or they can operate as mini-policies that add additional coverage. Endorsements are often used as a method of personalizing insurance to fit the specific needs of the insured.  A common example of an endorsement is an additional insured endorsement which adds coverage for additional insured drivers by name.

Sources

Insurance Schools, Inc.

International Risk Management Institute

Querrey and Harrow

FREE CONSULTATION

Our Attorneys

injury lawyer kirk morgan

Kirk Morgan

Attorney

injury lawyer billy walker

Billy Walker

Attorney

injury lawyer will walker

Will Walker

Attorney

injury lawyer chuck slaughter

Chuck Slaughter

Attorney

Types of Burns

Hot Fire Icon

Degrees of Burns

First , second , and third degree burns

Learn More
Medical Attention Icon

Burn Injuries

There are many types of burn injuries

Learn More
Heat Icon

Scald Burn Injury

Caused when very hot liquids come into contact with skin

Learn More
Electricty Plug In Icon

Electrical Burns

Electricity can burn the skin and is capable of causing internal damage

Learn More
Chemical Burn Injury Icon

Chemical Burns

Caused when a strong acid or base comes into direct contact with skin

Learn More
Car Icon

Car/Boating Accidents

Thermal burns can occur if the car catches fire or explodes

Learn More
Small Fires Icon

Gas Explosions

Caused when a gas leak combines with an ignition source

Learn More
Business Icon

Worker’s Compensation

If you've been burned on the job, you may need legal guidance

Learn More
Battery Icon

E-Cigarette Burns

Can be caused by defective batteries or overheated vapor

Learn More

WE HAVE THE EXPERIENCE

National Trial Lawyers Badge
American Leaders Forum Badge
American Bar Badge
American Judicature Society Badge
South Carolina Association for Justice Badge
Super Lawyers Logo
NBTA Badge
Lawyers.com Badge
Civil Justice Foundation Badge
Melvin Belli Badge
SCAJ Association Badge
SC Capital Club Badge