- Duty to defend the insured
- Duty to gain the insured’s cooperation
- The insurer’s duty of good faith and fair dealing
- The duty to settle claims and the effect of failure to settle
- Privacy Protection
- Pay Benefits
- Risk Assessment
- Reserves for Policy
Duty to defend the Insured
Moreover, an insurer may owe a duty to defend its insured against a claim in which ultimately no damages are awarded, and any doubt as to whether the facts support a duty to defend is usually resolved in the insured’s favor.
Duty to gain the Insured’s Cooperation
The issue of how much information can or should be shared among an insurer, its insured, the relationship between an insurance company and policyholder must be a partnership. Each party must be able to rely on one another and abide by the guidelines of their end of the agreement, regardless of whether they legally have to or not.
The insurer’s duty of good faith and fair dealing
Generally, the insurer owes a duty to deal fairly and in good faith with its insured’s; this duty emanates from the special relationship which exists between the parties, not necessarily from the terms of the contract.
Duty to Settle Claims
Where the covered damages alone could exceed policy limits, an insurer would be well- advised to settle the case, even if the settlement includes non-covered damages.
In order to protect your privacy, insurance companies have to abide by privacy. Therefore, they have to keep and give out your information in accordance with strict rules for your protection. In case you want someone else to have access to your information, that person may be required to have a power of attorney or written proof of authorization on file, according to whatever’s dictated by the privacy guidelines.
Once an insurable accident happens and the damages have been reviewed, if it’s found that the claim qualifies based on the benefits, time periods and exclusions given in your policy, your insurance provider has to pay you (beneficiaries too, if applicable) within the financial limitations of your policy. Remember that your insurer isn’t liable for the deductible of your policy and that they have the option of paying only the replacement value or actual value, based on the type of coverage you have. Also if you have a life insurance policy with cash values, your benefits may decrease if you have any outstanding loans.
Underwriters are hired by insurance companies to figure out the amount of risk that each potential insured person presents and to charge a premium in accordance to that. If they don’t do this then they risk having more claims than premiums and not being able to hold up there end of the bargain for policy holders.
Reserves for Policy
Insurance companies have to set aside a certain amount of their income for policy reserves. Policy reserves mirror the potential amount of claims they’ll be required to pay. Because the money is in reserves, it ensures they’ll be able to pay it out.