a contract (insurance policy) in which the insurer (insurance company) agrees for
a fee (insurance premiums) to pay the insured party all or a portion of any loss
suffered by accident or death. The losses covered by the policy may include property
damage or loss from accident, fire, theft or intentional harm; medical costs and/or
lost earnings due to physical injury; long-term or permanent loss of physical capacity;
claims by others due to the insured's alleged negligence (e. g. public liability
auto insurance); loss of a ship and/or cargo; finding a defect in title to real
property; dishonest employees; or the loss of someone's life. Life insurance may
be on the life of a spouse, a child, one of several business partners or an especially
important manager ("key man" insurance), all of which is intended to provide for
survivors or to ease the burden created by the loss of a financial contributor.
So-called "mortgage" insurance is life insurance which will pay off the remaining
amount due on a home loan on the death of the husband or wife. Life insurance proceeds
are usually not included in the probate of a dead person's estate, but the funds
may be counted by the Internal Revenue Service in calculating estate tax. Insurance
companies may refuse to pay a claim by a third party against an insured, but at
the same time may be required to assume the legal defense (pay attorney's fees or
provide an attorney) under the doctrine of "reservation of rights. "
See also insured insurer reservation uninsured motorist clause Workers' Compensation
Acts
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