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Insurance law is a legal mechanism for risk management. It's designed to allocate the risk of loss from one person to a group of people. Typically, every person contributes a set amount (the premium) to a fund. When a loss occurs to one person, that loss can be alleviated by the collective fund, or insurance. Premium rates are determined by the underwriters, who must evaluate the good and bad risks. Exclusions and limitations describe the types of conditions or the types of loss not covered by a particular insured's policy.

Traditionally, insurance covered risks associated with home ownership, health insurance, liability in motor vehicle accidents, and disability or death/survivorship. Product lines then expanded to cover include such things as professional malpractice, unemployment, lender fraud, product liability, personal injury and crop insurance.

New Product Lines continue to be developed. Recent additions fall into a category labeled as “specialty.” Examples of coverage in the specialty category encompass travel insurance, identity theft insurance, wedding insurance, insurance for college students, insuring household help, boat or winter sports insurance, dog bite liability, and risks associated with relying on technology and the Internet to conduct business.

The goal of insurance law is to ensure consumer protection (fairness) and economic stability. Due to the interstate commerce nature of insurance, the federal government regulates insurance companies. Congress enacted the McCarron-Ferguson Act, requiring that insurance companies be regulated by the individual states. Thus, state insurance statutes often override federal laws (except tax laws). Generally, if the issue relates to the “business” of insurance, state law governs. If the issue relates to challenges outside the industry (such as labor, tax, securities), federal law governs.

Tips on handling claims (flood, hurricane, auto accident, etc.). Contact your insurance company or agent as soon as possible. Inform the agent you have suffered a loss and will be filing a claim. If your home is not habitable, tell the agent where you can be reached.

After you file a claim, your insurance agent should make every effort to help you get back on your feet as soon as possible. The agent will first assign your claim to an adjuster (an insurance company employee or an independent adjuster hired by the company), who will then inform you of the steps to file your claim.

If the insurance company's eventual offer is not satisfactory to you, seek an attorney.

By Kathleen Goolsby           

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