legal terms

Subrogation developed as an equitable doctrine. It facilitates an adjustment of rights to avoid unjust enrichment. To subrogate means 搕o substitute.?So subrogation substitutes one person for another, with respect to a claim or right that the second person has against a third party. In simpler terms and with respect to insurance, subrogation is the right of an insurer to replace the injured insured and to sue the party that is responsible for the damages incurred.

escape clause桾he insurer has no liability if there is other insurance.


pro-rata clause桾he insurer抯 liability is limited to a proportional share of the loss.


excess clause桾he insurer provides only excess insurance over any other insurance.

Life insurance underwriters generally limit keyperson life insurance benefits to no more than five to ten times the key person抯 annual compensation

Insurance consumer protection is discussed as is the societal change from caveat emptor to caveat vendor.

Caveat emptor is a term that encapsulated the judicial approach to product liability in the first half of the 20 th century. The term translates to “let the buyer beware.” It was a clear acknowledgment that the buyer of goods or services was expected to watch out for himself, and it was the prevailing common law doctrine regarding the transaction between buyers and sellers. It informed the buyer not to rely on the legal system to protect him from sellers that might not treat him fairly. Over time this doctrine has fallen out of favor and has been effectively replaced by a doctrine of caveat vendor.

Caveat vendor translates to “let the seller beware.” It characterizes an environment that goes so far as to permit lawsuits against sellers of high-calorie meals in which plaintiffs seek damages because they have become obese. This is the environment in which agents are selling their products and one in which they are at great risk of professional liability.

post-claim representation?/b>Consumers have access to post-claim representation by way of the state bar after they have a claim. Laws have been enacted to protect insurance consumers, and certain remedies are available if they have been treated unfairly.


pre-claim representation桟onsumers have had little or no representation with respect to important issues that arise before the handling of a claim. Such issues are rule-making, rate-making, and policy formation.

Enforceable promise—only the insurer makes an enforceable promise. The insurer cannot require the insured to pay additional premiums .

To avoid litigation in multiple death cases where it is difficult or impossible to determine who survived longer, virtually every state has passed the Uniform Simultaneous Death Act. Under this act, each individual, absent evidence to the contrary, is deemed to be the survivor with respect to his or her own property. In the case of life insurance, the insured is deemed to have survived the beneficiary. Whether the policy beneficiary is revocable or irrevocable is immaterial.

suggests that two classes or types of relationships are appropriately recognized as insurable interests for a life insurance policy:
Pecuniary (monetary) interest, and
family relationship.

Whether it is created before or after the insured event, the right to receive the payment of the insurance proceeds is considered derivative, or secondary.