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Insurance Coverage

Introduction to California Insurance Law

Insurance is a contract in which one party pays money, called a premium, and the other party promises to reimburse the first for specified types of losses such as illness, property damage, or death, if they occur. The party agreeing to compensate for losses is called the insurer or underwriter, who writes the policy. The party who pays for this protection is called the insured. This is the person who takes out the insurance policy. Common types of insurance are automobile liability insurance, homeowners' insurance, life insurance, title insurance, malpractice insurance, and workers' compensation insurance.

Insurance laws are highly regulated. A seller of insurance must be licensed+ by the state or states in which it does business. States usually have a governmental agency specifically devoted to regulating the business of insurance. These agencies also investigate complaints against insurance companies or insurance agents. State and federal laws limit and interpret insurance agreements, as do decisions of each state's courts.

As with any controversy, there are attorneys on both sides of any insurance issue. For example, in a personal injury matter the plaintiff's attorney filing the lawsuit is usually referred to as "personal injury attorney" or “plaintiffs’ counsel.” The attorney defending the lawsuit is usually called an "insurance defense attorney" and paid by an insurance company. Attorneys practicing in the area of insurance law may be insurance defense attorneys, counsel for an insurance company, or may be "captured counsel." Captured counsel refers to a law firm that from the outside looks and operates like a regular law firm, but does exclusive work for an insurance company.

Almost every legal practice touches insurance law issues in some context. Real estate attorneys may recommend title insurance. Estate and elder attorneys may recommend life insurance or long-term care insurance. Personal injury attorneys may review automobile coverage to determine what compensation their clients should receive. All attorneys are generally required to have some form of malpractice insurance.

An insurance adjuster will usually handle the preliminary issues surrounding a claim or loss. If an adjuster cannot settle a claim, or if a complaint is filed in court, the case will usually be passed to an in-house attorney or to outside counsel. The insurance adjuster will stay abreast of the matter, but only in a supervisory capacity.

Liability Insurance

Liability coverage protects your business against situations such as slip-and-fall accidents. A general liability policy, as opposed to a product liability or vehicle liability policy, covers damages that your business is ordered to pay to an individual who is injured on your property. A related, though technically different, type of insurance is product liability insurance, which protects you from lawsuits by customers who claim to be hurt by a product you provided. If your business offers a product to the public, you might consider this type of insurance. It can be expensive, but much less so than a multi-million dollar award to a victorious plaintiff. Finally, auto liability insurance covers damage that you or an employee cause in a business-related accident. Auto liability coverage is generally not included in general liability policies, and is legally required for drivers in most states.

Automobile Insurance

Commercial automobile policies cover the cars, vans, trucks and trailers used in your business. The coverage will reimburse you if your vehicles are damaged or stolen or if the driver injures a person or property.

Directors' and Officers' Liability Insurance

This type of insurance is generally purchased by corporations and nonprofit organizations to cover the costs of lawsuits against directors and officers.

Errors and Omissions Insurance

Errors and omissions ("E & O") insurance covers inadvertent mistakes or failures that cause injury to a third party. The act must actually be an inadvertent error, and not merely poor judgment or intentional acts. For example, an E & O policy would cover damages arising from an insurance agent failing to file policy applications, or a notary forgetting to fill out notarizations properly.

Malpractice Insurance

Malpractice insurance, or professional liability insurance, pays for losses resulting from injuries to third parties when a professional's conduct falls below the profession's standard of care. For example, if a doctor makes a mistake that other doctors of his specialty would not have made, his patient might sue him. A malpractice policy will pay his defense costs and any judgment or settlement. Malpractice insurance is available for doctors, dentists, accountants, real estate agents, architects, and other professionals.

Workers' Compensation Insurance

Workers' compensation insurance covers you for an employee's on-the-job injuries. Businesses with employees are required by various state laws to carry some type of workers' compensation insurance. In most cases, workers' compensation laws prohibit the employee from bringing a negligence lawsuit against an employer for work-related injuries.

If you are in need of an insurance coverage attorney, contact our attorneys today.

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