In order to understand insurance law, it is useful to understand insurance first. Insurance is a contract in which one party (the “insured”) pays money (called a premium) and the other party promises to reimburse the first for certain types of losses (illness, property damage, or death) if they occur.
Insurance law falls into three major categories. First, the insurance company will hire lawyers to represent the insured in case she is sued for something related to her insurance contract. These are known as “insurance defense attorneys.” For example, an automobile insurance company will hire an attorney to represent an insured driver when she gets sued for causing another driver’s injuries. The second category of insurance law helps insured people determine when an insurance company must pay a claim. Third, insurance companies typically hire attorneys to make sure the company complies with all applicable laws and regulations, which can vary by state.
There are many types of insurance. The government runs some kinds of insurance, like Social Security disability, worker’s compensation, and unemployment insurance. However, the term “insurance law” usually refers to the law surrounding private insurance. The most common types of private insurance are health insurance, automobile liability insurance, homeowner’s insurance, life insurance, title insurance, and malpractice insurance.
Terms to Know
Policy: The contract which outlines what the insurance company will pay in case of loss.
Benefit: The money or services an insurance company provides in case of loss.
Insured: The person who receives the insurance benefit. However, in the case of life insurance, the “insured” is the person whose life is insured, and the person who receives the benefit is called the “beneficiary.”
Premium: The money the insured pays the insurance company.
Claim: A request for benefits when loss occurs.
Coverage: The types of losses which the insurance company will reimburse.
Insurance Agent: A person who is licensed to sell insurance in a particular state.
Practice Area Notes
Insurance defense attorneys are often local attorneys that have contracted with insurance companies in order to find work. Some of these offices work exclusively with insurance companies, so individuals are usually unable to hire these attorneys on their own. However, some insurance companies allow their insured to pick their own attorney, which may allow those individuals to hire otherwise unavailable insurance defense attorneys. Most insurance defense attorneys work to zealously represent the insured. However, the insured does not pay the attorney out of pocket, and many clients have concerns that the attorney is actually working in the best interest of the insurance company. If an insurance defense attorney represents you, be sure you understand everything that happens in your case, and do not be afraid to ask questions.
Since there are so many different types of insurance, and insurance touches so many aspects of life, most lawyers are familiar with some aspect of insurance law. Personal injury and medical malpractice attorneys routinely deal with medical insurance companies, similarly, auto accident attorneys routinely work with auto insurance companies. Real estate attorneys often recommend that their clients purchase title insurance, and are very familiar with homeowners’ insurance policies. Probate attorneys must frequently distribute life insurance proceeds and estate planners often recommend different types of life insurance arrangements.