Insurance law covers all law relating to the insurance industry, specifically insurance policies and claims. It is meant to regulate and create standards to govern the practice of the business of insurance (sales), policy writing and policy content, and the handling of claims. These laws are meant to protect consumers and insurance companies by constructing unambiguous boundaries and methods for enforcement when the law is violated.
“In general, an insurance contract must meet four conditions in order to be legally valid: it must be for a legal purpose; the parties must have a legal capacity to contract; there must be evidence of a meeting of minds between the insurer and the insured; and there must be a payment or consideration.”1
Insurance law also clearly defines insurance fraud and penalties for it. This includes working with a consumer to commit a fraudulent claim, denying coverage to people who are considered insurance risks, or refusing to payout once a claim is made.
The reason for insurance is to allow people to prepare for the unexpected. In purchasing insurance they are taking steps for financial coverage in the event of an accident, death, health issue, or damage to property or business. Some nations even mandate purchasing insurance for certain situations. For example, holding insurance in order to register a car, or having homeowners insurance if they hold a mortgage. 2
References:
1. Greene, M.R. (2013). Insurance: Contract Law. In Encyclopædia Britannica online. Retrieved from http://www.britannica.com/EBchecked/topic/289537/insurance
2. WiseGeek. (n.d.) What is Insurance Law? Retrieved from http://www.wisegeek.com/what-is-insurance-law.htm
Insurance Law. (n.d.) Retrieved March 29, 2014 from Wikipedia the Free Encyclopedia http://en.wikipedia.org/wiki/Insurance_law
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