Insurance business law is the area of law that governs the business of insurance. It consists of case law, statutes, and rules and regulations that pertain to parties engaging in an agreement where one party pays a premium and the other agrees to reimburse the first party for the types of losses named in the insurance agreement. There are several types of insurance covered by insurance business law, including malpractice, auto, and homeowners insurance. Most insurance companies are subject to both regional and national laws and are regulated by regional government agencies. Many disputes arise between parties when the insurance company refuses to pay a claim for a loss, and courts look to insurance business law to help settle disputes and to protect the public against companies that deal in unfair and bad faith practices.
Insurance companies are often obligated to pay out insurance claims filed by policy holders as long as the terms and conditions of the policies are met. For example, if a homeowner purchases insurance for losses that may occur due to a fire, then the insurance company is obligated by contract and insurance business law to pay for repairs or replacement costs if the home is destroyed by a fire. Some insurance companies refuse to pay claims because they assert that policy holders have violated the terms of the policy or that the type of loss is not covered. Courts will use regional and state laws to determine the legal issues and make rulings in those cases. Regional laws often supersede national laws, but there are cases in which courts must follow national laws instead.
Some insurance disputes revolve around unfair dealing and bad faith. These are cases in which insurance companies refuse to pay out a claim even when they know they are obligated to do so by insurance business law. Other companies may delay in making insurance payments to policy holders with the intent to never pay them or to pay them partially long after payments are due. Bad faith dealings by insurance companies are often regulated by government agencies, and companies that violate those regulations are sometimes prohibited from selling insurance and financial products in the region. Courts also use insurance business law to make judgments in cases where bad faith and unfair dealing is asserted by plaintiffs.
Attorneys also represent insurance companies and assist them in navigating government regulations that impact insurance business law. Attorney services may include counsel on how to comply with changes to regulations, representation before government boards, and drafting policy statements and policies. Their attorneys may also help them avoid practices that may be considered unfair dealing.