Fundamentals of Risk and Insurance

by Vaughan, Emmett J.; Vaughan, Therese M.

• ISBN13: 9780471299882
• ISBN10: 047129988X
• Edition: 8th
• Format: Hardcover
• Copyright: 1999-01-01
• Publisher: John Wiley & Sons Inc

Summary

This classic, comprehensive book is divided into three sections. The first section examines the concept of risk, the nature of the insurance device, and the principles of risk management. This section also provides an overview of the insurance industry. The second section examines the traditional fields of life and health insurance as solutions to the risks connected with the loss of income. The Social Security system, workers compensation, and other social insurance coverages are discussed. The final section deals with the risks associated with the ownership of property and legal liability. Updated to reflect the changes in the field of insurance since 1996, and a listing of Web sites of interest.

Table of Contents

SECTION ONE RISK AND INSURANCE	1	(175)
Chapter 1 The Problem of Risk	1	(11)
The Concept of Risk	2	(6)
Current Definitions of Risk	2	(1)
Our Definition of Risk	3	(1)
Uncertainty and Its Relationship to Risk	3	(1)
The Degree of Risk	4	(1)
Risk Distinguished from Peril and Hazard	5	(1)
Classifications of Risk	6	(2)
The Burden of Risk	8	(1)
Methods of Handling Risk	8	(4)
Risk May Be Avoided	9	(1)
Risk May Be Retained	9	(1)
Risk May Be Transferred	9	(1)
Risk May Be Shared	10	(1)
Risk May Be Reduced	10	(2)
Chapter 2 The Insurance Device	12	(13)
The Nature and Functions of Insurance	12	(8)
Risk Sharing and Risk Transfer	12	(1)
Insurance Defined from the Viewpoint of the Individual	13	(1)
Risk Reduction through Pooling	13	(6)
Insurance Defined from the Viewpoint of Society	19	(1)
Insurance: Transfer or Pooling?	19	(1)
Insurance and Gambling	20	(1)
The Economic Contribution of Insurance	20	(1)
Elements of and Insurable Risk	20	(2)
Randomness	21	(1)
Economic Feasibility	22	(1)
Self-Insurance	22	(3)
Chapter 3 Risk Management	25	(24)
The Nature of Risk Management	25	(1)
Development of Risk Management	26	(1)
The Risk Management Process	27	(6)
Determination of Objectives	27	(1)
Identification of Risks	28	(2)
Evaluation of Risks	30	(1)
Consideration of Alternatives and Selection of the Risk Treatment Device	30	(2)
Implementation of the Decision	32	(1)
Evaluation and Review	32	(1)
Considerations in Selecting From Among the Tools of Risk Management	33	(3)
The Rules of Risk Management	33	(2)
Risk Characteristics as Determinants of the Tool	35	(1)
The Nonprofessional Risk Manager	36	(1)
Risk Management and the Individual	36	(1)
Buying Insurance	37	(5)
Common Errors in Buying Insurance	37	(1)
Need for a Plan	37	(2)
Tax Considerations	39	(1)
Selecting the Agent and the Company	39	(3)
Alternatives to Commercial Insurance	42	(7)
Self-Insurance	42	(2)
Captive Insurance Companies	44	(1)
Risk Retention Act of 1986	45	(4)
Chapter 4 The Fields of Insurance	49	(17)
Private (Voluntary) Insurance	50	(6)
The History of Private Insurance	50	(3)
Modern Classification of Insurance Coverages	53	(3)
Social Insurance	56	(6)
History of Social Insurance	59	(1)
Social Insurance Programs in the United States	59	(2)
Is Social Insurance Really Insurance?	61	(1)
Public Guarantee Insurance Programs	62	(2)
Federal Public Guarantee Insurance Programs	62	(1)
State Public Guarantee Insurance Programs	63	(1)
Public Guarantee Programs as Insurance	63	(1)
Similarities in the Various Fields of Insurance	64	(2)
Chapter 5 The Private Insurance Industry	66	(26)
Classification of Private Insurers	67	(10)
Classification by Type of Product	67	(1)
Types of Insurers by Form of Ownership	67	(10)
Marketing Systems	77	(4)
The Agent	77	(1)
Life Insurance Distribution System	78	(1)
Property and Liability Distribution Systems	79	(1)
Corporate Combinations	80	(1)
Cooperation in the Insurance Industry	81	(4)
Rating Organizations	82	(1)
Distressed and Residual-Risk Pools	82	(2)
Educational Organizations	84	(1)
Insurance Trade Associations	84	(1)
Reinsurance Organizations	85	(1)
Competition in the Insurance Industry	85	(7)
Price Competition	85	(1)
Quality Competition	86	(1)
Is the Insurance Industry Really Competitive?	86	(6)
Chapter 6 Regulation of the Insurance Industry	92	(29)
The Why of Government Regulation of Insurance	92	(7)
The Why of Regulations Generally	92	(1)
Approaches to Government Control of Business	93	(2)
Rationale for Regulation of the Insurance Industry	95	(1)
Goals of Insurance Regulation	96	(1)
A Brief History of Insurance Regulation	96	(3)
Regulation Today	99	(1)
The Current Regulatory Structure	99	(1)
National Association of Insurance Commissioners	99	(1)
Areas Regulated	100	(8)
Licensing of Insurers	100	(1)
Examination of Insurers	100	(1)
Insurer Insolvencies	101	(1)
Regulation of Rates	102	(4)
Regulation of Reserves	106	(1)
Investments	106	(1)
Policy Forms	106	(1)
Competence of Agents	107	(1)
Unfair Practices	107	(1)
Risk-Retention Groups	107	(1)
State versus Federal Regulation	108	(3)
Pressure for Repeal of the McCarran-Ferguson Act	108	(1)
Consequences of the Repeal of the McCarran-Ferguson Act	109	(1)
Repeal of the McCarran-Ferguson Act as a States-Rights Issue	109	(1)
State versus Federal Regulation and Public Choice	110	(1)
Appendix: The Availability/Affordability Debate	111	(10)
The Essence of the Debate	111	(1)
Existing Subsidies in the Insurance Market	111	(4)
Income Redistribution Effects of Subsidies in Insurance	115	(1)
Causes of Availability Problems	116	(1)
Causes of Affordability Problems	116	(2)
Availability and Affordability and Public Choice	118	(3)
Chapter 7 Functions of Insurers	121	(15)
Functions of Insurers	121	(1)
Rate-Making	122	(4)
Some Basic Concepts	122	(1)
Types of Rates	123	(3)
Production	126	(1)
Underwriting	126	(3)
The Agent's Role in Underwriting	127	(1)
Underwriting Policy	127	(1)
Process of Underwriting	128	(1)
Postselection Underwriting	129	(1)
Loss Adjustment	129	(3)
Adjusters	129	(1)
Courses of Action in Claim Settlement	130	(1)
Adjustment Process	130	(1)
Difficulties in Loss Settlement	131	(1)
The Investment Function	132	(1)
Miscellaneous Functions	132	(1)
Legal	132	(1)
Accounting	132	(1)
Engineering	132	(1)
Appendix: Retrospective Rating Plans	133	(3)
The Retrospective Formula	133	(3)
Chapter 8 Financial Aspects of Insurer Operations	136	(21)
Statutory Accounting Requirements	136	(4)
Differences between Statutory Accounting and GAAP	137	(1)
Terminology	138	(1)
The NAIC Codification Project	139	(1)
Property and Liability Insurers	140	(3)
Concept of Earned Premiums	140	(1)
Incurred Losses	141	(1)
Expenses Incurred	141	(1)
Summary of Operations	141	(2)
Life Insurance Companies	143	(3)
Life Insurer Assets	144	(1)
Life Insurer Liabilities	144	(1)
Life Insurers' Policyholders' Surplus	145	(1)
Life Insurer Summary of Operations	145	(1)
Surplus Drain in Life Insurance	146	(1)
Reinsurance	146	(6)
Nature of Reinsurance	146	(1)
Types of Reinsurance Treaties	146	(1)
Reinsurance in Property and Liability Insurance	147	(1)
Reinsurance in Life Insurance	148	(1)
Functions of Reinsurance	148	(1)
The Catastrophe Risk Exchange (CATEX)	148	(1)
Risk Financing Alternatives to Reinsurance	149	(3)
Taxation of Insurance Companies	152	(5)
State Premium Tax	152	(1)
Federal Income Taxes	153	(4)
Chapter 9 The Legal Framework	157	(19)
Insurance and the Law of Contracts	157	(4)
General Requirements of an Enforceable Contract	158	(2)
Void and Voidable	160	(1)
Special Legal Characteristics of Insurance Contracts	161	(15)
Insurance Is a Contract of Indemnity	161	(5)
Insurance Is a Personal Contract	166	(1)
Insurance Is a Unilateral Contract	167	(1)
Insurance Is a Conditional Contract	167	(1)
Insurance Is a Contract of Adhesion	167	(1)
Insurance Is an Aleatory Contract	168	(1)
Insurance Is a Contract of Utmost Good Faith	168	(4)
The Insurance Contract as a Contract	172	(1)
Policy Construction	172	(4)
SECTION TWO LIFE AND HEALTH INSURANCE	176	(271)
Chapter 10 Managing Personal Risks	176	(24)
Objectives in Managing the Risk of Premature Death	177	(1)
Other Steps in Managing Personal Risks	178	(1)
Managing Risks Associated with Premature Death	178	(15)
Identifying Risks Associated with Premature Death	178	(1)
Measuring Risks Associated with Premature Death	178	(11)
Estate Planning	189	(4)
The Risks Associated with Superannuation	193	(1)
The Risk of Outliving the Retirement Accumulation	193	(1)
Estimating the Accumulation Need	193	(1)
The Risks Associated with Disability	194	(2)
Needs Analysis for the Disability Risk	195	(1)
Resources Available to Meet the Disability Risk	195	(1)
Addressing the Unmet Disability Income Needs	196	(1)
Evaluating the Medical Expense Exposure	196	(1)
Managing the Risk of Unemployment	196	(2)
State Unemployment Insurance Programs	197	(1)
Retention and Risk Reduction	198	(2)
Chapter 11 Social Insurance Programs	200	(23)
Old-Age, Survivors', Disability, and Health Insurance	201	(14)
Eligibility and Qualification Requirements	201	(1)
Financing	202	(1)
Amount of Benefits	203	(1)
Classes of Benefits	203	(2)
Summary of Qualification Requirements	205	(1)
Loss of Benefits-The OASDHI Program	206	(4)
Soundness of the Program	210	(5)
Workers Compensation	215	(8)
Historical Background	215	(1)
Rationale of Workers Compensation Laws	216	(1)
Principles of Workers Compensation	216	(1)
An Overview of State Workers Compensation Laws	217	(6)
Chapter 12 Introduction to Life Insurance	223	(19)
Some Unique Characteristics of Life Insurance	224	(1)
Life Insurance Is Not a Contract of Indemnity	224	(1)
Types of Life Insurance Contracts	224	(3)
Reasons for Difference in Term and Cash Value Insurance	225	(1)
The Level Premium Concept	226	(1)
Tax Treatment of Life Insurance	227	(2)
Code Definition of Life Insurance	228	(1)
Impact of the 1984 Rules	229	(1)
Current Life Insurance Products	229	(5)
Term Insurance	230	(1)
Whole-Life Insurance	231	(1)
Universal Life Insurance	231	(1)
Variable Life Insurance	232	(1)
Adjustable Life Insurance	233	(1)
Endowment Life Insurance	234	(1)
Participating and Nonparticipating Life Insurance	234	(1)
General Classifications of Life Insurance	234	(8)
Ordinary Life Insurance	235	(1)
Industrial Life Insurance	235	(1)
Group Life Insurance	235	(3)
Credit Life Insurance	238	(1)
Total Life Insurance in Force in the United States	238	(1)
Other Types of Life Insurance	238	(4)
Chapter 13 The Actuarial Basis of Life Insurance	242	(14)
Life Insurance Premium Computation	243	(7)
Mortality	243	(1)
Interest	243	(4)
The Net Single Premium	247	(1)
The Net Level Premium	248	(2)
Reserves on Life Insurance Policies	250	(3)
Benefit-Certain and Benefit-Uncertain Contracts	253	(3)
Chapter 14 The Life Insurance Contract-General Provisions	256	(12)
Inception of the Life Insurance Contract	257	(1)
General Provisions of Life Insurance Contracts	257	(5)
Entire Contract Clause	257	(1)
Ownership Clause	258	(1)
Beneficiary Clause	258	(1)
Incontestable Clause	259	(1)
Misstatement of Age Clause	260	(1)
Grace Period	260	(1)
Reinstatement	261	(1)
Suicide Clause	261	(1)
Aviation Exclusions	261	(1)
War Clause	262	(1)
Settlement Options	262	(1)
Interest Option	262	(1)
Installments for a Fixed Period	262	(1)
Installments of a Fixed Amount	263	(1)
Life Income Options	263	(2)
Taxation of Policy Proceeds under Various Settlement Options	265	(3)
Chapter 15 The Life Insurance Contract-Other Provisions	268	(15)
Nonforfeiture Values	268	(5)
Cash Option	269	(1)
Paid-Up Reduced Amount	270	(1)
Extended term Insurance	271	(1)
Policy Loan Provisions	271	(1)
Automatic Premium Loan	272	(1)
Dividend Provisions	273	(1)
Important Optional Provisions	274	(5)
Disability Waiver of Premium Provision	274	(2)
Accidental Death Benefit	276	(1)
Guaranteed Insurability Option	276	(2)
Common Disaster Clause	278	(1)
Spendthrift Clause	278	(1)
Rights of Creditors of Life Insurance Proceeds	279	(1)
Cost-of-Living Riders	279	(1)
Universal Life Policy Provisions	279	(4)
Premium and Cost of Insurance Provision	279	(1)
Charges in the Amount of Insurance	280	(1)
Death Benefit Provision	280	(3)
Chapter 16 Special Life Insurance Forms	283	(12)
Specialized Life Contracts	283	(7)
Mortgage Redemption Policy	284	(1)
Joint Mortgage Protection Policy	284	(1)
Survivorship Whole Life	284	(1)
Family Income Policy	285	(1)
Family Income Rider	285	(1)
Family Maintenance Policy	286	(1)
Family Protection Policy	286	(1)
Enhanced ("Economic") Ordinary Life	287	(1)
Return-of-Premium and Return-of-Cash Value Policy	287	(1)
Modified Whole Life	288	(1)
Graded-Premium Whole Life	289	(1)
Indexed Whole Life	289	(1)
Single-Premium Life	289	(1)
Juvenile Insurance	290	(1)
Innovations of the 1970s and 1980s	290	(2)
Indeterminate Premium Policies	290	(2)
Low-Load and No-Load Life Insurance	292	(1)
Advantages and Disadvantages of Special Forms	292	(3)
Chapter 17 Buying Life Insurance	295	(19)
Decisions in Buying Life Insurance	296	(13)
Buy Term and Invest in the Difference?	296	(2)
Life Insurance as an Investment	298	(1)
Choosing the Company	299	(3)
Comparing Differences in Cost	302	(3)
The NAIC Life Insurance Illustrations Model Regulation	305	(1)
NAIC Model Replacement Regulation	306	(1)
Industry Reform Initiatives	306	(1)
Shopping for Universal and Variable Life	307	(2)
Some Additional Tax Considerations	309	(5)
Section 1035 Exchange ("Rollovers")	309	(1)
Life Insurance and Divorce Agreements	310	(4)
Chapter 18 Annuities and Pension Benefits	314	(26)
Annuities	315	(8)
Classification of Annuities	316	(1)
Income Tax Treatment of Annuities	317	(1)
Annuities and the Federal Estate	318	(1)
Specialized Annuities	319	(3)
Annuities as Investments for Retirement	322	(1)
Qualified Retirement Plans	323	(11)
A General Overview of Qualified Plans	323	(1)
Types of Qualified Plans	324	(2)
Factors Influencing Benefit Levels	326	(3)
Significance of the Nature of the Employer's Promise	329	(2)
Other Benefits	331	(1)
Distribution Requirements	332	(1)
Taxation of Distributions	333	(1)
Individual Retirement Accounts	334	(4)
Deductible Contributions	335	(1)
Nondeductible Contributions	335	(1)
Funding Instruments	335	(1)
Tax Treatment of IRAs	335	(1)
The New Roth IRA	336	(1)
The Education IRA	337	(1)
A Concluding Note	338	(2)
Chapter 19 Managing the Retirement Risk	340	(15)
An Overview of the Retirement Risk	340	(4)
Causes of the Retirement Risk	341	(1)
Two Risks Associated with Retirement	341	(1)
Retirement Risk Alternatives	341	(1)
An Overview of Retirement Planning Process	342	(2)
Constructing a Retirement Plan	344	(11)
Estimating Retirement Needs	345	(4)
Planning the Accumulation	349	(1)
Managing the Distribution	349	(6)
Chapter 20 Health Insurance: Disability Income Insurance	355	(19)
General Nature of Disability Income Insurance	356	(3)
Types of Insurers	356	(1)
Methods of Marketing	356	(1)
Need for Disability Income Insurance	356	(1)
Short-Term versus Long-Term Disability Coverage	357	(1)
Disability Income Underwriting and Pricing	358	(1)
Disability Income Contracts	359	(7)
Perils Covered	359	(1)
Occupational-Nonoccupational Disability	359	(1)
Waiting Periods	360	(1)
Limitations on Amount of Coverage	360	(1)
Definitions of Disability Income Policies	360	(2)
Exclusions in Disability Income Contracts	362	(1)
Payments for Other Than Total Disability	362	(2)
Optional Benefit Provisions	364	(2)
Individual Health Insurance Policy Provisions	366	(3)
Individual Health Insurance Continuance Provisions	366	(1)
Uniform Provisions	367	(1)
Optional Uniform Provisions	368	(1)
Programming and Buying Disability Income Insurance	369	(5)
Determining Disability Income Coverage Needs	369	(1)
Evaluating Existing Sources of Protection	370	(1)
Taxation of Disability Income	371	(1)
Cost of Disability Income Insurance	371	(3)
Chapter 21 Health Insurance-Coverage for Medical Expenses	374	(31)
Sources of Health Care Financing	375	(2)
Private Medical Expense Health Insurers	375	(1)
Distribution of Insurance Buyers	376	(1)
Traditional Medical Expense Insurance Plans	377	(1)
Group Medical Expense Insurance	377	(1)
Coverage Approaches	378	(1)
Traditional Fee-For-Service Medical Expense Insurance	378	(6)
Hospitalization Insurance	379	(1)
Surgical Expense and Physicians' Expense Insurance	380	(1)
Physician's Expense Reimbursement Insurance	381	(1)
Major Medical Policy	381	(3)
Alternate Approaches to Health Care Financing	384	(4)
Health Maintenance Organizations	384	(2)
Provider-Sponsored Organizations	386	(1)
Preferred Provider Organizations	386	(1)
Point-of-Service Plans	387	(1)
Cost-Containment Provisions	387	(1)
Other Medical Expense Coverages	388	(4)
Limited Health Insurance Policies	388	(1)
Dental Expense Insurance	388	(1)
Limited Policies-Prescription Drugs	389	(1)
Medical Savings Accounts	389	(1)
Medicaid	390	(2)
Buying Health Insurance	392	(1)
First-Dollar Coverages	392	(1)
Taxes and Health Care Costs	393	(1)
The Health Insurance Problem and Proposed Solutions	393	(12)
Deficiencies of the Current System	394	(2)
Previous Attacks on the Problem	396	(3)
The Failure of Past Efforts	399	(1)
Proposed Solutions	399	(3)
The Future of Health Care Financing	402	(3)
Chapter 22 Health Insurance for the Elderly	405	(25)
Medicare	406	(19)
The Traditional Medicare Program	407	(4)
Traditional Program Medicare Supplement Policies	411	(3)
Medicare + Choice	414	(3)
Medical Savings Accounts	417	(1)
Medicare + Choice Medicare Supplement Insurance	417	(1)
The Future of Medicare	418	(1)
Long-Term Care Insurance	419	(1)
Nature of the Long-Term Care Exposure	419	(1)
Inadequacy of Medicare for Long-Term Care Needs	419	(1)
Development of LTC Insurance	420	(1)
Coverage of LTC Policies	421	(3)
Cost of LTC Insurance	424	(1)
Unresolved TQ-LTCI Issues	424	(1)
The Life Insurance Accelerated Benefits Alternative to LTC	424	(1)
Viatication	425	(1)
Medicaid Planning	425	(5)
Statutory Restrictions	426	(1)
Spousal Impoverishment Provisions	426	(1)
Estate Recovery	427	(1)
Medicaid Partnerships	427	(3)
Chapter 23 Employee Benefits and Other Business Uses of Life and Health Insurance	430	(17)
Employee Benefits Generally	431	(1)
Group Life and Health Insurance as Employee Benefits	432	(1)
Group Term Life Insurance	432	(1)
Group Ordinary Life Insurance	432	(1)
Group Paid-Up Life Insurance	433	(1)
Group Universal Life	433	(1)
Survivor Income Benefit Insurance	433	(1)
Retired Lives Reserve	433	(1)
Funding Issues	433	(2)
Funding Through a 501 (c) (9) Trust	435	(1)
Accounting for Retiree Health Care Costs	435	(1)
Pensions	435	(6)
Legislation Affecting Pensions Plans	435	(2)
Qualification Requirements	437	(1)
Top-Heavy Plans	437	(1)
Funding Pensions	438	(3)
ERISA Pension Plan Termination Insurance	441	(1)
Cafeteria Employee Benefit Plans	442	(1)
Some Specialized Uses of Life Insurance in Business	442	(2)
Business Continuation Insurance	442	(1)
Key-Person Insurance	443	(1)
Split-Dollar Plan	444	(1)
Deferred Compensation	444	(1)
Summary	444	(3)
SECTION THREE PROPERTY AND LIABILITY INSURANCE	447	(241)
Chapter 24 The Homeowners Policy-General Provisions	447	(18)
The Homeowners Policy Program	447	(2)
Historical Development	447	(1)
General Nature of the Homeowners Program	448	(1)
Homeowners Section I Coverage	449	(10)
Section I Coverage: An Overview	449	(1)
Perils Insured	450	(1)
Dwelling and Other Structures Coverage	450	(3)
Personal Property Coverage	453	(3)
Loss of Use Coverage	456	(1)
Additional Coverages	456	(3)
Homeowners Deductibles	459	(1)
Other Provisions	459	(6)
Section I Conditions	459	(2)
General Conditions Applicable to Sections I and II	461	(4)
Chapter 25 The Homeowners Policy Forms	465	(15)
Differences among Homeowners Forms	465	(11)
Homeowners 2 Broad Form	465	(5)
Homeowners Special Form-Form 3	470	(2)
Homeowners 4 Contents Broad Form	472	(1)
Homeowners Special Personal Property Coverage Form HO 00 15	472	(2)
Condominium Unit Owners Form 6	474	(1)
Homeowners Modified Coverages Form 8	475	(1)
Homeowners Section I Optional Coverages	476	(2)
Optional Perils	476	(1)
Other Endorsements	477	(1)
Summary	478	(2)
Chapter 26 Other Personal Forms of Property Insurance	480	(21)
Monoline Fire Dwelling Program	481	(2)
Current Dwelling Program	481	(1)
Eligibility	481	(1)
Coverages under the Dwelling Program	482	(1)
Endorsements to the Dwelling Program Forms	482	(1)
Mobilehome Program	483	(2)
ISO Mobilehome Program	484	(1)
Eligibility	484	(1)
Coverage on the Mobilehome	484	(1)
Flood Insurance	485	(4)
General Nature of the Program	485	(2)
The Residential Flood Insurance Policy	487	(2)
Inland Marine Coverage for the Individual	489	(6)
Personal Inland Marine Floaters	490	(4)
Insurance on Watercraft	494	(1)
Buying Property Insurance for the Individual	495	(2)
Pricing and Cost Considerations	495	(1)
Choosing the Form	496	(1)
Tailoring the Coverage under the Homeowners Policy	496	(1)
Flood Insurance	497	(1)
Title Insurance	497	(4)
Torrens Systems	498	(3)
Chapter 27 Negligence and Legal Liability	501	(14)
Criminal and Tortuous Behavior	502	(10)
Negligence and Legal Liability	502	(1)
There Must Be Negligence	502	(3)
There Must Be Actual Damage or Loss	505	(1)
Negligence Must Be the Proximate Cause of the Damage	506	(3)
Defenses to Negligence	509	(3)
Possible Changes in the Tort System	512	(1)
Summary	513	(2)
Chapter 28 General Liability Insurance for the Individual	515	(21)
Liability Insurance in General	515	(1)
Types of Liability Insurance	516	(1)
Comprehensive Personal Liability Coverage	517	(4)
General Nature of the Coverage	517	(1)
Personal Liability Coverage	517	(7)
Medical Payments to Others	524	(1)
Additional Coverages	525	(2)
Section II Conditions	527	(1)
Cost of Personal Liability Insurance	528	(1)
Optional Personal Liability Endorsements	528	(3)
Professional Liability Insurance	531	(1)
Malpractice Insurance	531	(1)
Errors and Omissions Insurance	532	(1)
Umbrella Liability Policy	532	(4)
Exclusions under the Umbrella Liability Policy	533	(1)
Cost of the Umbrella	533	(3)
Chapter 29 The Automobile and Its Legal Environment	536	(18)
A Brief Overview of Automobile Coverages	537	(1)
Automobile Liability Insurance	537	(1)
Medical Payments Coverage	537	(1)
Physical Damages Coverage	537	(1)
Uninsured Motorists Coverage	537	(1)
Legal Liability and the Automobile	537	(6)
Vicarious Liability and the Automobile	537	(1)
Guest Hazard Statues	538	(1)
Automobile Liability Insurance and the Law	539	(1)
Insurance for High-Risk Drivers	539	(4)
The Automobile Insurance Problem and Changes in the Tort System	543	(4)
Criticisms of the Traditional System	543	(1)
The No-Fault Concept	543	(4)
Cost of Automobile Insurance	547	(4)
Insurance Services Office Automobile Rating Systems	548	(3)
The Shifting View of Auto Insurance	551	(3)
Chapter 30 The Personal Auto Policy	554	(25)
General Nature of the Personal Auto Policy	554	(2)
Eligibility	555	(1)
Policy Format	556	(1)
Liability Coverage	556	(5)
Liability Insuring Agreement	556	(2)
Liability Exclusions	558	(2)
Other Liability Coverage Provisions	560	(1)
Medical Payments Coverage	561	(2)
Medical Payments Insurance Agreement	561	(1)
Medical Payments Exclusions	562	(1)
Limitations Applicable to Medical Payment Recoveries	562	(1)
Uninsured Motorist Coverage	563	(2)
Uninsured Motorist Insuring Agreement	563	(1)
Underinsured Motorist Coverage	564	(1)
Physical Damage Coverage	565	(4)
Physical Damage Insuring Agreement	565	(1)
Physical Damage Exclusions	566	(2)
Other Physical Damage Provisions	568	(1)
Policy Conditions	569	(1)
Part E-Duties after an Accident or Loss	569	(1)
Part F-General Provisions	569	(1)
Endorsements to the PAP	570	(4)
Extended Liability Coverage	571	(1)
Named Non-Owner Policy	571	(1)
Miscellaneous Type Vehicle Endorsement	571	(3)
Antique and Classic Automobiles	574	(1)
Buying Automobile Insurance	574	(3)
Liability Coverage	575	(1)
Medical Payments Coverage	575	(1)
Physical Damage Coverage	576	(1)
Uninsured Motorist Coverage	576	(1)
Cost Difference Among Companies	576	(1)
Summary	577	(2)
Chapter 31 Commercial Property Insurance	579	(29)
Commercial Property Coverage	579	(2)
Commercial Property Direct Loss Coverages	581	(8)
Commercial Property Coverage Policies	581	(1)
Building and Personal Property Coverage Form	581	(6)
Blanket Insurance	587	(1)
Reporting Form Coverage	588	(1)
Builder's Risk Coverage Form	588	(1)
Condominium Association Coverage Form	588	(1)
Condominium Commercial Unit Owner's Coverage Form	588	(1)
Standard Property Policy	589	(1)
Plate Glass Insurance	589	(1)
Commercial Property Coverage for Indirect Loss	589	(3)
Business Interruption Insurance	589	(1)
Extra Expense Insurance	590	(1)
Contingent Business Interruption and Extra Expenses	591	(1)
Leasehold Interest Insurance	591	(1)
Rain Insurance	591	(1)
Boiler and Machinary Insurance	592	(2)
Boiler and Machinery Coverage Form	592	(1)
Small Business Boiler and Machinary Forms	593	(1)
Transportation Coverages	594	(5)
Ocean Marine Insurance	594	(2)
Inland Marine Insurance	596	(3)
The National Flood Insurance Program	599	(1)
The General Property Form Flood Insurance Policy	599	(1)
Nonresidential Condominiums	600	(1)
Insurance Against Dishonesty	600	(3)
Employee Crime Coverages-Fidelity Bonds	601	(1)
Nonemployee Crime Coverages	602	(1)
Package Crime Policies	603	(1)
Package Policies for Business Firms	603	(2)
Commercial Package Policy	603	(1)
Businessowners Policy	604	(1)
Summary	605	(3)
Chapter 32 Commercial Liability Insurance	608	(28)
Employees Liability and Workers Compensation	609	(2)
Workers Compensation Policy	609	(2)
General Liability Insurance	611	(11)
General Liability Exposures	612	(1)
Commercial General Liability Coverage	613	(7)
Other Portfolio Liability Coverages	620	(1)
Miscellaneous General Liability Coverages	620	(2)
Commercial Automobile Insurance	622	(5)
Business Auto Coverage Form	622	(2)
Garage Coverage Form	624	(1)
Truckers Coverage Form	625	(1)
The Motor Carrier Coverage Form	626	(1)
Aviation Insurance	627	(1)
Aircraft Liability Insurance	627	(1)
Hull Coverage	628	(1)
Liability Insurance for Common Carriers	628	(1)
The Liability of a Common Carriers	628	(1)
Insurance Requirements	629	(1)
Motor Truck Cargo Policy-Trucker's Form	629	(1)
Insurance for Bailees	629	(2)
Bailee Liability	629	(1)
Bailee Liability Coverages	630	(1)
Excess Liability and Umbrella Liability Coverage	631	(5)
Excess Liability Distinguished from Umbrella Liability Contracts	631	(1)
Umbrella Liability Policies	632	(4)
Chapter 33 Surety Bonds and Credit Insurance	636	(11)
Surety Bonds	637	(4)
Suretyship Distinguished from Insurance	637	(1)
Contract Bonds	638	(1)
Court Bonds	638	(2)
License and Permit Bonds	640	(1)
Public Official Bonds	640	(1)
Miscellaneous Bonds	641	(1)
Credit Insurance	641	(2)
Types of Policies	642	(1)
Coinsurance and the Normal Loss	642	(1)
Collection Service	643	(1)
Credit Enhancement Insurance	643	(4)
Municipal Bond Guarantee Insurance	643	(1)
Muncipal Lease Insurance	644	(1)
Commercial Paper Insurance	644	(1)
Industrial Development Bond Insurance	644	(1)
Money Market Fund Insurance	644	(3)
Chapter 34 Insurance in the Future	647	(41)
Social Insurance Programs	647	(2)
The Social Security System	648	(1)
Medicare	648	(1)
Health Insurance	648	(1)
Changes in the Legal Environment	649	(8)
Changes in the Tort System	649	(2)
Pollution and Environmental Impairement Liability	651	(1)
Workers Compensation Laws	652	(1)
Protection for Catastrophe Exposure	653	(1)
Federal Tax Laws	654	(1)
Possible Changes in the Pattern of Regulation	655	(2)
Changes in the Insurance Industry	657	(3)
Changes in the Industry Structure	657	(1)
Changes in Distribution Patterns	658	(2)
Globalization of Insurance	660	(2)
Multinational Corporations	660	(1)
Financial Services Trade Barriers	661	(1)
Foreign Insurers in the U.S.	661	(1)
U.S. Insurers Abroad	662	(1)
Some Persistent Problems	662	(1)
The AIDS Problem	662	(1)
Genetic Testing	663	(1)
Crime and Its Associated Costs	663	(1)
Availability and Affordability of Insurance	664	(1)
Lack of Consumer Sophistication	664	(1)
Unwarranted Criticism of the Insurance Industry	665	(1)
Career Opportunities in Insurance	666	(22)
Opportunities in the Insurance Sales Field	666	(1)
Nonsales Opportunities in the Insurance Industry	667	(1)
Opportunities in the Risk Management Field	667	(1)
A Concluding Observation	668	(20)
Appendix A Glossary	688	(1)
Author Index	689	(2)
Subject Index	691