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BASICS OF INSURANCE

BASICS OF INSURANCE. OBJECTIVES. 1. Identify and describe the provisions of standard fire insurance policies which define the rights of insurance companies.

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BASICS OF INSURANCE

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  1. BASICS OF INSURANCE

  2. OBJECTIVES 1. Identify and describe the provisions of standard fire insurance policies which define the rights of insurance companies. 2. Explain how an insurance company can often successfully defend against arson with less evidence than is required for a criminal case. 3. Identify the types of information that may be available from insurance companies and their investigation reports. 4. Understand how information obtained from insurance companies can assist with case and motive development.

  3. Insurance company information may help establish motives Investigators need to understand the workings of insurance companies & the types of information available

  4. Important Investigative Information • Dates of coverage • Coverage increases or decreases • Named insured • Insurance agents • Previous claims • Expiration dates • Any additional coverage • Loss payee • Previous insurance

  5. NEW YORK STANDARD FIRE INSURANCE POLICY Referred to as “the 165 lines” Used in Missouri for commercial properties “ARSON” not mentioned in policy

  6. In Missouri, the “Easy Read Form” is usually used for residential properties. The underlying conditions & exclusions are the same as in the New York Standard.

  7. CONDITIONS SUSPENDING OR RESTRICTING INSURANCE INCREASE IN HAZARD Insurer is not liable for the loss if the hazard is increased by means under the control of the insured

  8. CONDITIONS SUSPENDING OR RESTRICTING INSURANCE VACANT OR ABANDONED PROPERTY Insurer is not liable for the loss if the property is vacant or unoccupied for more than 60 days

  9. INSURED’S DUTIES 1. Give notice of loss 2. Protect from further damage 3. Furnish complete inventory 4. Exhibit damaged property 5. May be required to exhibit all books of accounts, bills, invoices, etc.

  10. INSURED’S DUTIES 6. If requested, submit a SWORN PROOF OF LOSS within 60 days

  11. The insured may be required to submit to an EXAMINATION UNDER OATH As many times as deemed reasonable All named insured can be required to submit Can be required to produce all relevant documents Can invoke Fifth Amendment Rights but doing so voids rights to insurance claim.

  12. VALUED POLICY A policy which provides its face amount shall be paid in the event of a total loss of the property covered In effect in Missouri

  13. Additional Coverage Above Actual Fire Loss Additional Living Expense Clause covers the insured’s costs while living away from damaged residence Business Interruption Insurance reimburses insured for loss of earnings sustained from a fire & unable to continue in business

  14. Additional Coverage Above Actual Fire Loss Mortgage Clause stipulates that proceeds are payable to the mortgage holder to extent of the amount owed Other Insurance Clause a provision stating what is to be done in the event there is more than one policy on the same property

  15. Other Insurance Clause Under Missouri Statute 379.145, in the event of a total loss and there is more than one policy on the property, the COMBINED companies must pay the total coverage, NOT divide it between them.

  16. Examining the Claim File It may contain: • Copy of settlement & release • Adjuster's report • Statements & depositions • Investigative reports • Copy of exam under oath • Title search summary • Proof of loss • Expert opinion reports • Notice of loss • Copy of current credit history • Policy declarations & application

  17. MISSOURI ARSON IMMUNITY LAW Named authorities may request in writing information from insurance companies with probable cause to believe arson has been committed.

  18. MISSOURI ARSON IMMUNITY LAW • State Fire Marshal • Prosecuting Attorney • Police Chief • Sheriff • Fire Chief • Other law enforcement agencies

  19. MISSOURI ARSON IMMUNITY LAW Insurance companies shall disclose all facts and information in possession concerning the fire loss.

  20. MISSOURI ARSON IMMUNITY LAW Named agencies, upon receipt of a written request from an insurance company, shall provide all facts and information concerning any fire loss...

  21. MISSOURI ARSON IMMUNITY LAW Unless such disclosure would jeopardize a pending prosecution. NOTHING shall be released unless approved by the prosecuting attorney.

  22. MISSOURI ARSON IMMUNITY LAW NO civil or criminal action shall lie against any agency or company or employee of either which acted in good faith under this law.

  23. BURDENS OF PROOF CIVIL CASE: Decided by a “preponderance of the evidence” CRIMINAL CASE: requires proof of guilt “beyond a reasonable doubt”

  24. INSURANCE COMPANY MAY DECIDE TO DENY LIABILITY: • Report of local authorities • Report of company’s adjuster or investigator • Report of private investigator • Company records indicating possible fraud or arson • Criminal prosecution • Any combination of these facts • Fraudulent or incomplete application information

  25. DEFENSE BASED ON ARSON BY INSURED INSURER DEFENSE WHEN SUED BY INSURED May not be enough evidence for criminal charges Insurer denies liability claiming the insured violated the insurance contract by damaging the insured property.

  26. DEFENSE BASED ON FRAUD BY INSURED INSURER DEFENSE WHEN SUED BY INSURED Insufficient evidence to base the defense on arson by the insured Defense may show the insured committed fraud or false swearing before or after the loss

  27. DEFENSE BASED ON FRAUD BY INSURED The fire may have been accidental but the insured filed a fraudulent proof of loss Insurer is not required to prove corpus delicti of fire

  28. AFFIRMATIVE DEFENSE SITUATIONS Insurer denies liability due to some violation of the insurance contract by the insured The defendant (insurer) denies everything the plaintiff (insured) contends and alleges something to contradict the plaintiff such as the insured set the fire.

  29. SUBROGATION CASES The insurance company has the right, upon payment of the insured’s loss, to take over legal rights against third parties to subrogate for recovery of any losses where it can prove a third party for responsible.

  30. A common complaint is that insurance companies settle claims too quickly Under Missouri law, a company must settle a claim within 60 days unless a “Reservation of Rights” has been sent to the insured and the insured has complied. It may be more cost effective for a company to offer a lower settlement than defend a legal action.

  31. National Insurance Crime Bureau • Investigates questionable insurance claims and cooperates with public law enforcement agencies with: • Access to insurance files • Analyzing insurance documents • Interviewing insurance personnel • Access to claim histories Does not assist in claim settlement

  32. Property Insurance Loss Register • Computerized index containing information on fire losses over $1,000 • Can search for: • Previous losses at a location • Loss history of an insured • Additional insurance on property Agency can contact PILR requesting information and if there has been a previous loss, PILR will notify the companies involved and request those companies contact the agency directly.

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