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Insurance Law
University of South Carolina School of Law
Davis, Bill

Basic Concepts
·                     First-party vs. third party insurance = if you are in an accident, the insurance company will pay to have your car fixed, less the deductible. 
§         Does not have to be the named party to have a first party dispute. (i.e. the policy is issued in your name, but spouse is involved, and is insured under the policy as well)
o       If you let a friend drive your car and he gets in an accident, he is also covered under your policy. 
§         Normally will be primary insurance, meaning the first in line. If he also has insurance, your insurance will be the excess to cover. 
·         The spouse is, by statue, insured. One of the definitions is that of insured. (name insured and insureds {spouse, etc})
o       She can also make a first-party claim w/the insurance company and can sue if the company does not want to pay.
·                     Third-party insurance =  
·                     Liability Insurance = protects the insured against third parties.
§         If the claims are covered by the policy, the insurance company has a duty to defend the insured. So, if the insured gets sued, the insurance company will hire a lawyer for the insured when he gets sued.
§         There is also a duty to indemnify, meaning, the insured will be reimbursed. 
·         There is no privity of K between the insurance company and the injured party, but the privity exists between the insured and the injured party. (So there is no right to sue the insurance company, they have to sue the “tortfeasor”)
o       The insurance company pays the lawyer, the lawyer represents the insured {and maybe the insurance company} – varies by state if the company is also represented
§         Unlike other insurance, with auto insurance, you must have a minimum amount of coverage, according to the law.
·         You can now drive w/o liability insurance and just pay a fee of $550- STUPID CHOICE. 
§         As of January 2007, you must have $25,000 for bodily injury and $50,000 per accident    (Example: 25/50/25 – 25 is bodily injury, per person, 50 is per accident – no matter how many people there are, 25 is property damage liability – covers the car and anything inside the car that was damaged)
·         If you don’t have enough insurance, your assets will be used to supplement the difference. (i.e. doctor that does not have enough insurance and only carry minimal limits)
·         The more assets you have, the more liability coverage you need to have.
·                     A person is generally not liable for another person’s fault, with certain exceptions (i.e., if you let someone else drive your car):
§         Negligent Entrustment
·         You had reason to know better, but you chose to allow them access in spite of that knowledge)
§         Knowing you have no license
§         Knowledge that you are a reckless driver
·         Similar to negligent entrustment
§         Employer/employee (respondeant superior)
·         Person is acting in the course of their employment.
·                     Head of Household Doctrine = if the head of a household provides a vehicle for the house to use, the HOH is held liable.
·                     Insurance Policies include;
§         Policy Jacket
·         Tells what the insurance covers
§         Declaration Page
§         Endorsements
·         Tailored by a particular state
·         Lists the exclusions that insurance companies will not cover that were listed as covered in the policy jacket
·                     Insurance Broker = works for YOU.
·                     Insurance Agent = agent of the insurance company.    
·                     Underwriter = the person who writes the policy (puts the company’s money on the line).
§         Rules are more restricted w/auto insurance. 
Creation of Insurance Policies
·                     An insurance policy is a contract. Therefore, you must have an offer and acceptance.
·                     When insurance for health is given, a physical is required. 
§         When an insurance policy is being processed, there has been an offer and tender, but not yet acceptance.   
·                     The agent must have the authority to bind coverage. And insurance is in effect unless the insurer is told otherwise. 
·                     Crossley v. State Farm Mut. Auto Insurance. 
§         Honestly tells insurance agent that he has no health problems.
§         Next day he is diagnosed with a health condition, but insurance company does not evaluate the risk.
§         Prior to them assessing his health, they send him a bill and he pays it.
§         They afterwards get the medical records and tell the guy they are rejecting his policy. 
§         Too bad for the insurance company, b/c his payment of the bill that they sent (their offer), was enough to create a binding contract. 

made a counteroffer. He had an accident, but there is no coverage b/c he did not accept the counteroffer. 
·                     Listack
§         If you pay the premium, you can assume you have coverage unless you are advised otherwise. (but if the check bounces, you don’t have any coverage – State v. Capital Life)
·         If you are in an accident after you leave an agent’s office to apply for coverage, you are covered under that policy, even if all you are given is a receipt. 
·                     Noisette v. Ismail, 384 S.E.2d 310
§         Court said where there is just a binder, if the insured is not furnished w/any writing, then her failure to give notice would not relieve her under the policy.
·                     Mailing
§         Law says if you mail anything to the insured at the last known address, there is a presumption that it was received, albeit, rebuttable. 
·         The only real way to rebut that presumption is to testify, by affidavit or otherwise, that you did not get it. 
o       A question for the jury.  
·                     Glover v. NC Mutual Life Insurance, 368 S.E.2d 68
§         When a policy has been wrongfully cancelled, the insurer has 3 options:
·         (1) Treat the policy as though its still enforced
·         (2) Bring a suit in equity to set aside the wrongful cancellation
·         (3) Bring at action at law to recover damages. 
·                     Elias v. Fireman’s Insurance Company, 309 SC 129 (pg. 30 supp)
§         Guy buys a policy that ensures his house and car on one policy.
§         The premium is broken down to show how much for each. 
§         Premium was paid by his mortgagee. 
§         Guy does not pay his premium. Policy is cancelled. And house burns down. 
§         The mortgagee pays the part for the house, but he is supposed to pay the part for the house. He does not pay the part for the car, and the house burns down. 
·         What result?