Insurance
Insurance is when one party indemnifies another from a predefined risk in exchange for a premium. There are numerous kinds of insurance available to an individual, the most common of which are health insurance, car insurance and property insurance. Businesses also avail of insurance to protect their businesses from future risks. The kinds of insurance available to businesses include general liability insurance, property insurance, worker's compensation, directors and officers insurance, and life insurance.
Insurance terms vary according to the type of insurance provided, the risk insured, and the insurance provider. The general term, however, is that regardless of whether the predefined risk occurs or not, insurance premium will not be returned. Insurance companies play a great role in maintaining economic ability. It is in this regard that the government and courts established laws to regulate such commerce.
Insurance law covers three main issues: insurance policies, insurance claims and rates, and insurance business. Insurance law is a rather young set of rules and regulations. It was not until 1944 when the U.S. Supreme Court held in a case that insurance is a "commerce" and, thus, is subject to Congress' constitutionally-mandated authority of regulating interstate commerce. As a result of the 1944 ruling, the McCarran-Ferguson Act, which provides that state laws control the insurance business, was passed. For insurance business that is not regulated by state law, other federal laws, such as the Sherman Act, apply.
Insurance laws vary from state to state. A business, especially those who operate in many states, must retain the services of an insurance law attorney as they are knowledgeable of not just insurance law but also other areas of law that may affect insurance, such as taxation, labor laws, and securities law. Similarly, an individual must also retain the services of an insurance law attorney especially if the individual seeks to have properties located in different states insured.
For companies seeking to operate an insurance business, federal and state law are rigid in their requirements for such applications. For one, both the federal and state governments require that these companies maintain sufficient liquidity to cover claims subject to insurance policies. In addition, laws also limit the type of insurance a company can provide based on jurisdiction. It is thus imperative for these businesses to hire insurance law experts.
Both insurer and insured must be prudent in understanding the terms of the insurance policies. One of the issues arising from insurance law would be predatory practices of insurers offering undervalued insurance policies. Insurance is a complicated matter. Interpreting the terms of an insurance policy may need the expertise of an insurance law attorney especially if the buyer is unsophisticated. It is easy for an insurance company to lead a buyer to believe that they are buying one type of insurance and receive another type.
Another area of insurance law that would require the assistance of an attorney would be insurance claims. If the insurance policies were ambiguous, insurers can twist the language of the policies and deny coverage to an unsophisticated buyer. Filing an insurance claim is also tedious as the process often requires numerous paper work to evidence the occurrence of the risk covered by the insurance. In cases of health insurance, the insured need to keep all medical records in order to make a successful insurance claim.