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Policy provisions to control the moral hazard



Watch the full video at https://rumble.com/vok4xs-a-video-explaining-how-underwriters-protect-against-insureds-who-present-a-.html and at https://youtu.be/zDLZmEUK2v8

Policy provisions can be used to control the risk of moral hazard, without refusing the risk in its entirety. Embedded provisions in the policies, such as the terms of "fraud and deception", work to deter the loss of persons at risk of morality.

the insured intentionally gives a false picture or hides any material fact or circumstance relating to the insurance. If the insurance is a marine insurance, the insured is obliged to voluntarily provide essential information even if it is not consulted. With other types of insurance, the responsibility lies with the insurer to ask the right questions. Failure to ask may force an insurer to take a risk that it would never have taken on the known truth.

Cancellation:

  • The insurer reserves the right to cancel the insurance. However, the latest consumer-oriented legislation has effectively eliminated this option after a policy has been in force for 60 days, with the exception of no premium or fraud. This legislation means that pre-risk inspections and reports after loss are even more important for the insurer.

Rapid reporting of a loss:

  • This requirement is designed to deprive the insured of the possibility of organizing evidence to appear honest.

Settlement of damage:

Exclusion or special restrictions:

  • The policy prescribes that there is no cover if the insured does something to increase the risk before loss. For example, if a cannery for tuna, without informing its insurer, decides to change its function to the production of plastic explosives and nitroglycerin, this significant increase in risk would not be covered.

I Dynasty, Inc. v. Princeton Insurance Co. 165 NJ 1 (NJ 07/24/2000), New Jersey's Supreme Court found that an insured who unjustifiably deactivated a sprinkler system increased the risk for the insurer that the fire insurance coverage was turned off. It also found that the "increase of danger" clause is standard language required by law N.J.S.A. 17: 36-5.20.


© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He also acts as a mediator for insurance-related disputes. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry.

Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

He is available at http://www.zalma.com and zalma@zalma.com. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award. For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claimants to become professionals in insurance claims.

Go to training available at https://claimschool.com; articles at https://zalma.substack.com, the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr Zalma on Twitter at https://twitter.com/bzalma ; Go to Barry Zalma videos at https://www.rumble.com/zalma; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ T the last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud- letter -2 / podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4

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