Insurer's Duty of Good Faith and Fair Dealing in Handling Claims of Insureds and Third Parties

If an insured does not think that his insurer handled his claim properly, he may have some recourse. Every contract contains an implied covenant of good faith and fair dealing that neither party will hinder the right of the other to receive the benefits of the contract. The duty imposed by this covenant applies to insurers and insureds. Some courts go so far as to hold the insurer to be a fiduciary to the insured.

Pleading a Case

If an insured sustains a loss and is denied payment by an insurer under an insurance policy, he may bring an action against the insurer to recover his claimed loss. The insured's complaint may state his cause of action generally and in brief and simple language. Some statutes provide optional methods of pleading. Courts may construe the averments of the complaint liberally. Matters not pleaded are generally waived.

Tie-in Arrangements

A "tie-in arrangement," also known as "insurance packing," in the insurance industry consists of a lender's extension of credit to a borrower on the condition that the borrower purchase certain insurance, usually from an insurer with close ties to the lender. The premium amounts for the insurance are usually added to the amount of the loan without the borrower's request or knowledge, and he may not find out about the tie-in arrangement until the lender presents the pre-prepared loan documents at the closing of the loan.

Types of Life Insurance

Each of the two basic types of life insurance--term life insurance and non-term or permanent life insurance--has several variations. Term life insurance is for a specified period of time. Whole life insurance covers the life of a person, however long that life is.

Methods of Selling Life Insurance

Life insurance companies may sell their insurance policies through full-time agents, brokerage markets, direct sales, or mass marketing.