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What are some of the primary terms or provisions of an insurance contract or a policy that give rise to dispute between the insurer and the insured and could oftentimes lead to litigation between the parties. We're going to go through a laundry list of some of the most common types of provisions but just note that oftentimes, these are required generally state but sometimes federal law to be included in the contract. So it's primarily aimed at protecting the insured from being basically forced into unfavorable situations or agreements. So again the extent of coverage or the extent to which it protects the insured can be a subject to litigation. We'll start first with the incontestability clause. This means basically that after a specific period of time, the contestability period, that an insurer cannot deny coverage to the insured based upon some falsities or misrepresentations that the insured made at the time of entering into the policy. So take the example, I seek insurance for a specific type of risk and I make false statements not knowingly if you make it knowingly, normally that's not protected, you can't knowingly attempt to defraud someone in this but I make some incorrect or inaccurate statements so don't fully disclosed something but it's not necessarily intentional. Now, if the insurer were to find out about this during this contestability period, they could do away with the contract. They could rescind it and no coverage was ever in place. But if it's outside of this incontestability period, then as the incontestable clause indicates, the insurer can't claim that this is grounds for not providing the insurance coverage identified in the policy. The idea is that after this period that any falsity, any misrepresentation shouldn't be considered grounds for denying coverage, that it shouldn't be what lead to or shouldn't be so closely related to the cause of the contingent risk or the occurring or the loss, that should be grounds for denying coverage. So, incontestability clause. Anti-lapse statutes. These are really, really important because it puts tons of requirements on the insured to give notice when a policy is ending, to let the insured know what they'd have to do to extend coverage under the policy and it prevents them every way, shape or form of simply allowing a policy to end at the end of the stated term. If the insured does not comply with this, even the insured is not paying any premiums afterwards, even if the insured really doesn't do anything, if the insured didn't follow through appropriately with the notification in terms of cancellation like it was supposed to then, it can be deemed that the policy never ends, that it continues on and is never really terminated so if a contingent loss occurs after the end of the stated policy, could still be covered. So this is again subject to a great deal of litigation. Appraisal clauses. These seeks to avoids disputes as to the value of loss of property particularly when you have some identified property that's the subject of the policy, potential law suit that rather than argue about it or rather than litigate about it, the parties, the insurer and the insured, agree to submit it to their third party appraisers and their determination as to the value of the covered good is binding upon the parties so avoids litigation over the value there. Duty to preserve clause and notice of claim clause. This is very important. This is part of the core duties of the insured that they're supposed to cooperate and notify the insurer of any claims. To start with, the duty to preserve evidence. In the event any covered risk or harm or contingent loss occurs, the insured has a duty to preserve all evidence or all information surrounding that situation and provide that to the insurer because again, we talked about it in the previous video, that the insurer is generally subrogated to the rights of the insured when they pay out on the claims so they can seek recovery of any of those funds paid for the losses against third parties who were responsible. This collection of evidence can be really important for that. But also it can be extremely important just to identify the standard nature of the loss that occurred. So, duty to preserve evidence and then notice of claims. The insured is obligated to notify the insurer any time something occurs that could give rise to a claim that is covered under the policy, that could give rise to the covered loss or the contingent harm that was identified. Even if no third party action has been initiated, even if there is no property loss yet or to date, if there's evidence or the situation identified makes it obvious that a claim or potential requirement for payment or liability of the insurer is imminent, then that needs to be reported to the insurer. That's the notice clause. Co-insurance clauses. Lots of times, the insurer will seek to establish a relationship between itself and other insurers. Co-insurance clause generally puts a requirement on the insured, so this is to the benefit of the insurer puts a requirement on them to purchase some secondary insurance for a particular loss or a particular contingency. This co-insurance may be required to pay first or pay in conjunction with any coverage. They tell you to purchase this additional coverage of insurance could cause the policy to be ineffective for this specific state or type of harm, for this contingency. So, co-insurance, that you have to have some insurance along with it. In the event you have multiple coverage, sometimes you have insurance companies fighting as to who bears primarily primary responsibility for covering a claim. Generally, both parties will try to make themselves only secondarily liable after another insurance provider has fully paid out the limit of their policy coverage. Often, this is a subject of a great deal of litigation and the court will be called in to determine who is what. Lots of times it will be a percentage sharing arrangement based on the percentage of coverage under the policy, etcetera. So issues arise when you have multiple coverage like that. Dispute clauses. Dispute clauses are basically alternative resolution methods made mandatory under the contract. That is you have to submit any dispute to arbitration. Submit it to arbitration and there will be pre-defined rules and methods etcetera for carrying on the arbitration before or instead of going to litigation. So, lots of times, states will not enforce these just because they're generally to the advantage of the insurer rather than the insured so these kinds are often denied by the court. But anyway, these are some of the primary clauses that give rise to dispute under insurance contracts. http://TheBusinessProfessor.com