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Insurance Abstract
A new and improved insurance policy with a limit on the number of
claims indemnified is herein disclosed. An insurance policy includes
a limitation clause, wherein the policy is limited if more than
a specified number of claims occur, incidents reported, or losses
paid, wherein at least one limitation in the limitation clause is
chosen from the group comprising: decreasing payment of defense
costs, decreasing payment of loss amount, decreasing payment of
both defense costs and payment of loss amount, and terminating the
policy. An insurance policy includes a first coverage amount and
at least a second coverage amount, the at least a second coverage
amount being different than the first coverage amount, wherein the
coverage amounts are not per claim coverage amounts. A re-insurance
policy includes a coverage amount, the coverage amount insuring
an associated primary policy provider against losses for at least
a first claim subsequent to a specified number of claims.
Insurance Claims
What is claimed is:
1. An insurance policy comprising: a limitation clause, wherein
the policy is limited if more than a specified number of claims
occur, wherein at least one limitation in the limitation clause
is chosen from the group comprising: decreasing payment of defense
costs, decreasing payment of loss amount, decreasing payment of
both defense costs and payment of loss amount, and terminating the
policy.
2. The insurance policy of claim 1, wherein the policy is limited
by excluding payment of costs to defend a claim.
3. The insurance policy of claim 1, wherein the policy is limited
by excluding payment of the loss amount.
4. The insurance policy of claim 1, wherein the policy is terminated
if more than a specified number of claims occur.
5. The insurance policy of claim 1, wherein the policy is limited
if more than one claim occurs within a specified time period.
6. The insurance policy of claim 5, wherein the amount of the defense
costs paid decreases with each subsequent claim.
7. The insurance policy of claim 6, wherein between approximately
99% and approximately 75% of the defense costs are paid for each
subsequent claim.
8. The insurance policy of claim 7, wherein between approximately
99% and approximately 75% of the defense costs are paid for a second
claim and between approximately 75% and approximately 0% of the
defense costs are paid for a third claim.
9. The insurance policy of claim 8, wherein between approximately
99% and approximately 75% of the defense costs are paid for the
second claim, between approximately 75% and approximately 50% of
the defense costs are paid for the third claim, between approximately
50% and approximately 25% of the defense costs are paid for a fourth
claim, and between approximately 25% and approximately 0% of the
defense costs are paid for a fifth claim.
10. The insurance policy of claim 5, wherein the amount of the
loss amount paid decreases with each subsequent claim.
11. The insurance policy of claim 10, wherein between approximately
99% and approximately 75% of the loss amount is paid for each subsequent
claim.
12. The insurance policy of claim 11, wherein between approximately
99% and approximately 75% of the loss amount is paid for a second
claim and between approximately 75% and approximately 0% of the
loss amount is paid for a third claim.
13. The insurance policy of claim 12, wherein between approximately
99% and approximately 75% of the loss amount is paid for the second
claim, between approximately 75% and approximately 50% of the loss
amount is paid for the third claim, between approximately 50% and
approximately 25% of the loss amount is paid for a fourth claim,
and between approximately 25% and approximately 0% of the loss amount
is paid for a fifth claim.
14. The insurance policy of claim 5, wherein the amount of the
defense costs and the amount of loss amount paid decreases with
each subsequent claim.
15. The insurance policy of claim 14, wherein between approximately
99% and approximately 75% of the loss amount is paid and between
99% and approximately 75% of the defense costs is paid for each
subsequent claim.
16. The insurance policy of claim 15, wherein between approximately
99% and approximately 75% of the loss amount is paid for a second
claim; between approximately 75% and approximately 0% of the loss
amount is paid for a third claim; between 99% and approximately
75% of the defense costs is paid for the second claim; and, between
75% and approximately 0% of the defense costs is paid for third
claim.
17. The insurance policy of claim 16, wherein between approximately
99% and approximately 75% of the loss amount is paid for the second
claim; between approximately 75% and approximately 50% of the loss
amount is paid for the third claim; between approximately 50% and
approximately 25% of the loss amount is paid for a fourth claim;
between approximately 25% and approximately 0% of the loss amount
is paid for a fifth claim; between 99% and approximately 75% of
the defense costs is paid for the second claim; between 75% and
approximately 50% of the defense costs is paid for the third claim;
between 50% and approximately 25% of the defense costs is paid for
the fourth claim; and, between 25% and approximately 0% of the defense
costs is paid for the fifth claim.
18. The insurance policy of claim 1, wherein the policy is limited
if more than two claims occur.
19. An insurance policy comprising: a limitation clause wherein
the policy is limited if more than a specified number of incidents
are reported, wherein at least one limitation in the limitation
clause is chosen from the group comprising: decreasing payment of
defense costs, decreasing payment of loss amount, decreasing payment
of both defense costs and payment of loss amount, and terminating
the policy.
20. The insurance policy of claim 19, wherein the policy is limited
if more than one incident is reported within a specified time period.
21. The insurance policy of claim 19, wherein the policy is limited
if more than two incidents are reported.
22. The insurance policy of claim 19, wherein the policy is terminated
if more than a specified number of incidents are reported.
23. An insurance policy comprising: a first insurance payment amount;
and, at least a second insurance payment amount, the at least a
second payment amount being different than the first payment amount.
24. The insurance policy of claim 23, wherein the insurance payment
amounts are for a specified category of exposure.
25. The insurance policy of claim 23, wherein the at least a second
payment amount comprises: at least a third insurance payment amount,
the at least a third payment amount being different than the first
and second payment amounts.
26. The insurance policy of claim 25, wherein the first, second,
and third payment amounts are each payment amounts for a specified
number of claims.
27. The insurance policy of claim 23, wherein the policy further
comprises: a limitation clause, wherein the policy is limited if
more than a specified number of claims occur, wherein at least one
limitation in the limitation clause is chosen from the group comprising:
decreasing payment of defense costs, decreasing payment of loss
amount, decreasing payment of both defense costs and payment of
loss amount, and terminating the policy.
28. The insurance policy of claim 27, wherein the policy is limited
if more than the specified number of claims occur within a specified
time period.
29. The insurance policy of claim 23, wherein the policy further
comprises: a limitation clause, wherein the policy is limited if
more than a specified number of incidents are reported, wherein
at least one limitation in the limitation clause is chosen from
the group comprising: decreasing payment of defense costs, decreasing
payment of loss amount, decreasing payment of both defense costs
and payment of loss amount, and terminating the policy.
30. The insurance policy of claim 29, wherein the policy is limited
if more than the specified number of incidents are reported within
a specified time period.
31. A re-insurance policy comprising: a coverage amount, the coverage
amount insuring an associated primary policy provider against losses
for at least a first claim subsequent to a specified number of claims.
32. The policy of claim 31, wherein the coverage amount is for
at least the first claim subsequent to the specified number of claims,
within a specified time period.
33. The policy of claim 31, wherein the primary policy has a first
coverage amount for a specified number of claims and at least a
second coverage amount, the at least a second coverage amount being
less than the first coverage amount, the re-insurance policy comprising:
a third coverage amount, the third coverage amount being the difference
between the first coverage amount and the second coverage amount.
34. An insurance policy comprising: a limitation clause, wherein
the policy is limited if more than a specified number of losses
are paid, wherein at least one limitation in the limitation clause
is chosen from the group comprising: decreasing payment of defense
costs, decreasing payment of loss amount, decreasing payment of
both defense costs and payment of loss amount, and terminating the
policy.
35. The insurance policy of claim 34, wherein the policy is limited
by excluding payment of costs to defend a claim.
36. The insurance policy of claim 34, wherein the policy is limited
by excluding payment of the loss amount.
37. The insurance policy of claim 34, wherein the policy is terminated
if more than a specified number of losses are paid.
38. The insurance policy of claim 34, wherein the policy is limited
if more than one loss is paid within a specified time period.
39. The insurance policy of claim 38, wherein the amount of the
defense costs paid decreases with each subsequent loss paid.
40. The insurance policy of claim 39, wherein between approximately
99% and approximately 75% of the defense costs are paid for each
subsequent loss paid.
41. The insurance policy of claim 40, wherein between approximately
99% and approximately 75% of the defense costs are paid for a second
loss paid and between approximately 75% and approximately 0% of
the defense costs are paid for a third loss paid.
42. The insurance policy of claim 41, wherein between approximately
99% and approximately 75% of the defense costs are paid for the
second loss paid, between approximately 75% and approximately 50%
of the defense costs are paid for the third loss paid, between approximately
50% and approximately 25% of the defense costs are paid for a fourth
loss paid, and between approximately 25% and approximately 0% of
the defense costs are paid for a fifth loss paid.
43. The insurance policy of claim 38, wherein the amount of the
loss amount paid decreases with each subsequent loss paid.
44. The insurance policy of claim 43, wherein between approximately
99% and approximately 75% of the loss amount is paid for each subsequent
loss paid.
45. The insurance policy of claim 44, wherein between approximately
99% and approximately 75% of the loss amount is paid for a second
loss paid and between approximately 75% and approximately 0% of
the loss amount is paid for a third loss paid.
46. The insurance policy of claim 45, wherein between approximately
99% and approximately 75% of the loss amount is paid for the second
loss paid, between approximately 75% and approximately 50% of the
loss amount is paid for the third loss paid, between approximately
50% and approximately 25% of the loss amount is paid for a fourth
loss paid, and between approximately 25% and approximately 0% of
the loss amount is paid for a fifth loss paid.
47. The insurance policy of claim 38, wherein the amount of the
defense costs and the amount of loss amount paid decreases with
each subsequent loss paid.
Insurance Description
[0001] This application claims priority to provisional patent applications
with Ser. No. 60/565,506, filed Apr. 26, 2004, entitled Insurance
Policy With Limit On Number Of Claims Indemnified, and Ser. No.
60/566,504, filed Apr. 29, 2004, entitled Insurance Policy With
Limit On Number Of Claims Indemnified.
I. BACKGROUND OF THE INVENTION
[0002] A. Field of the Invention
[0003] This invention relates to the art of insurance, and more
particularly to limiting the number of claims indemnified by an
insurance provider.
[0004] B. Description of the Related Art
[0005] Insurance companies in most lines of insurance take into
account two broad categories of analysis in determining their rates
and experience: Frequency and Severity. Simply defined, "Frequency"
is the number of claims, while "Severity" deals with how
bad or severe the claims are (most commonly measured financially).
Frequency: number of claims. Severity: intensity of the claims.
The effect of an earthquake or hurricane on a given home and auto
insurer can easily illustrate these concepts: the number of insured
homes and autos damaged in the natural disaster would represent
"Frequency," while the amount of damage and corresponding
financial loss to each insured home and auto (as well as the collective
amount of damage and financial loss) would represent "Severity."
[0006] All insurers in the property and casualty field limit their
liability by placing "limits" on the dollar amount of
indemnification that they will provide to their policyholders. This
strategy of placing limits on indemnification amounts is designed
to keep an insurers' exposure-to-loss within reasonable confines.
Every insurance policy is designed to indemnify the beneficiary
of the policy against loss, up to certain financial limits.
[0007] Except in cases where one event is being insured, such as
a given space shuttle mission, no policy has been designed that
places limits on the number of claims (either in total or of a specific
type or nature) that will be indemnified in a given policy period.
For example, medical professional liability policies all place limits
on the financial amount of indemnification provided under the terms
of the policy. They do NOT place a limit on the number of malpractice
lawsuits that they will respond to and cover. Thus coverage is not
exhausted until the financial limits of indemnification have been
exhausted.
[0008] The present invention provides a new and improved method
for limiting an insurance provider's exposure, and overcomes certain
difficulties inherent in the related inventions while providing
better overall results.
[0009] II. Definitions
[0010] To assist the reader in understanding the description of
this invention, the definitions of the following terms should be
noted.
[0011] Alien insurer--an insurance provider that has its principal
place of business outside the United States and is not licensed
in the particular jurisdiction of interest.
[0012] Captive insurance company--an insurance provider that is
owned and/or controlled by the entity that is being insured.
[0013] Category of exposure--a specific area of liability or loss
exposure.
[0014] Claim--any demand for money or services made by, or against,
a policyholder
[0015] Coverage amount--the total monetary value that an insurance
provider will pay to, or on behalf of, a policyholder for each incident.
[0016] Deductible--The amount of loss paid by the policyholder
before the insurance policy benefits become payable.
[0017] Domestic insurer--an insurance provider that has its principal
place of business in the United States and is licensed in the particular
jurisdiction of interest.
[0018] Foreign insurer--an insurance provider that has its principal
place of business in the United States and is not licensed in the
particular jurisdiction of interest.
[0019] Incident--any event which a policyholder should reasonably
believe could become a claim.
[0020] Insurance jurisdiction--a region under the regulatory control
of an insurance regulatory agency.
[0021] Insurance payment amount--the total monetary value that
an insurance provider will pay to, or on behalf of, a policyholder
independent of the number of claims and/or incidents covered.
[0022] Insurance policy--any agreement or indemnification for losses
by an insurance provider or a re-insurance provider. In this invention,
the definition of "insurance policy" specifically excludes
one-time planned events, such as the space shuttle launch or the
2004 Olympics in Athens.
[0023] Loss Amount--the monetary value to restore the party suffering
a loss, in whole or in part, by payment, repair, or replacement.
[0024] Property and casualty insurance--an insurance policy providing
coverage for loss and/or damage to personal or real property, life,
or person.
[0025] Reinsurance--(1) A contract of indemnity against liability
by which the insurance provider procures another insurance to insure
against loss or liability by reason of the original insurance; (2)
Insurance by one insurance provider of all or part of a risk accepted
by it with another insurance provider which agrees to reimburse
the insurance provider for the portion of the claim insured.
III. SUMMARY OF THE INVENTION
[0026] In accordance with one aspect of the present invention,
an insurance policy includes a limitation clause, wherein the policy
is limited if more than a specified number of claims occur, wherein
at least one limitation in the limitation clause is chosen from
the group comprising: decreasing payment of defense costs, decreasing
payment of loss amount, decreasing payment of both defense costs
and payment of loss amount, and terminating the policy.
[0027] In accordance with another aspect of the present invention,
the policy is limited by excluding payment of costs to defend a
claim.
[0028] In accordance with another aspect of the present invention,
the policy is limited by excluding payment of the loss amount.
[0029] In accordance with another aspect of the present invention,
the policy is terminated if more than a specified number of claims
occur.
[0030] In accordance with another aspect of the present invention,
the policy is limited if more than one claim occurs within a specified
time period.
[0031] In accordance with another aspect of the present invention,
the amount of the defense costs paid decreases with each subsequent
claim.
[0032] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the defense costs
are paid for each subsequent claim.
[0033] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the defense costs
are paid for a second claim and between approximately 75% and approximately
0% of the defense costs are paid for a third claim.
[0034] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the defense costs
are paid for the second claim, between approximately 75% and approximately
50% of the defense costs are paid for the third claim, between approximately
50% and approximately 25% of the defense costs are paid for a fourth
claim, and between approximately 25% and approximately 0% of the
defense costs are paid for a fifth claim.
[0035] In accordance with another aspect of the present invention,
the amount of the loss amount paid decreases with each subsequent
claim.
[0036] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the loss amount
is paid for each subsequent claim.
[0037] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the loss amount
is paid for a second claim and between approximately 75% and approximately
0% of the loss amount is paid for a third claim.
[0038] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the loss amount
is paid for the second claim, between approximately 75% and approximately
50% of the loss amount is paid for the third claim, between approximately
50% and approximately 25% of the loss amount is paid for a fourth
claim, and between approximately 25% and approximately 0% of the
loss amount is paid for a fifth claim.
[0039] In accordance with another aspect of the present invention,
the amount of the defense costs and the amount of loss amount paid
decreases with each subsequent claim.
[0040] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the loss amount
is paid and between 99% and approximately 75% of the defense costs
is paid for each subsequent claim.
[0041] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the loss amount
is paid for a second claim, between approximately 75% and approximately
0% of the loss amount is paid for a third claim, between 99% and
approximately 75% of the defense costs is paid for the second claim,
and between 75% and approximately 0% of the defense costs is paid
for third claim.
[0042] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the loss amount
is paid for the second claim, between approximately 75% and approximately
50% of the loss amount is paid for the third claim, between approximately
50% and approximately 25% of the loss amount is paid for a fourth
claim, between approximately 25% and approximately 0% of the loss
amount is paid for a fifth claim, between 99% and approximately
75% of the defense costs is paid for the second claim, between 75%
and approximately 50% of the defense costs is paid for the third
claim, between 50% and approximately 25% of the defense costs is
paid for the fourth claim, and between 25% and approximately 0%
of the defense costs is paid for the fifth claim.
[0043] In accordance with another aspect of the present invention,
the policy is limited if more than two claims occur.
[0044] In accordance with another aspect of the present invention,
an insurance policy includes a limitation clause wherein the policy
is limited if more than a specified number of incidents are reported,
wherein at least one limitation in the limitation clause is chosen
from the group comprising: decreasing payment of defense costs,
decreasing payment of loss amount, decreasing payment of both defense
costs and payment of loss amount, and terminating the policy.
[0045] In accordance with another aspect of the present invention,
the policy is limited if more than one incident is reported within
a specified time period.
[0046] In accordance with another aspect of the present invention,
the policy is limited if more than two incidents are reported.
[0047] In accordance with another aspect of the present invention,
the policy is terminated if more than a specified number of incidents
are reported.
[0048] In accordance with another aspect of the present invention,
an insurance policy includes a first insurance payment amount and
at least a second insurance payment amount, the at least a second
payment amount being different than the first payment amount.
[0049] In accordance with another aspect of the present invention,
the at least a second payment amount comprises at least a third
payment amount, the at least a third payment amount being different
than the first and second payment amounts.
[0050] In accordance with another aspect of the present invention,
the first, second, and third payment amounts are each payment amounts
for a specified number of claims.
[0051] In accordance with another aspect of the present invention,
the insurance payment amounts are for a specified category of exposure.
The categories of exposure can be, but is not limited to, bodily
injury, property damage, wage loss, emotional distress, etc.
[0052] In accordance with another aspect of the present invention,
a re-insurance policy includes a coverage amount, the coverage amount
insuring an associated primary policy provider against losses for
at least a first claim subsequent to a specified number of claims.
[0053] In accordance with another aspect of the present invention,
the coverage amount is for at least the first claim subsequent to
the specified number of claims, within a specified time period.
[0054] In accordance with another aspect of the present invention,
the primary policy has a first coverage amount for a specified number
of claims and at least a second coverage amount, the at least a
second coverage amount being less than the first coverage amount,
the re-insurance policy comprising a third coverage amount, the
third coverage amount being the difference between the first coverage
amount and the second coverage amount.
[0055] In accordance with another aspect of the present invention,
an insurance policy includes a limitation clause, wherein the policy
is limited if more than a specified number of losses are paid, wherein
at least one limitation in the limitation clause is chosen from
the group comprising: decreasing payment of defense costs, decreasing
payment of loss amount, decreasing payment of both defense costs
and payment of loss amount, and terminating the policy.
[0056] In accordance with another aspect of the present invention,
the policy is terminated if more than a specified number of losses
are paid.
[0057] In accordance with another aspect of the present invention,
the policy is limited if more than one loss is paid within a specified
time period.
[0058] In accordance with another aspect of the present invention,
the amount of the defense costs paid decreases with each subsequent
loss paid.
[0059] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the defense costs
are paid for each subsequent loss paid.
[0060] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the defense costs
are paid for a second loss paid and between approximately 75% and
approximately 0% of the defense costs are paid for a third loss
paid.
[0061] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the defense costs
are paid for the second loss paid, between approximately 75% and
approximately 50% of the defense costs are paid for the third loss
paid, between approximately 50% and approximately 25% of the defense
costs are paid for a fourth loss paid, and between approximately
25% and approximately 0% of the defense costs are paid for a fifth
loss paid.
[0062] In accordance with another aspect of the present invention,
the amount of the loss amount paid decreases with each subsequent
loss paid.
[0063] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the loss amount
is paid for each subsequent loss paid.
[0064] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the loss amount
is paid for a second loss paid and between approximately 75% and
approximately 0% of the loss amount is paid for a third loss paid.
[0065] In accordance with another aspect of the present invention,
between approximately 99% and approximately 75% of the loss amount
is paid for the second loss paid, between approximately 75% and
approximately 50% of the loss amount is paid for the third loss
paid, between approximately 50% and approximately 25% of the loss
amount is paid for a fourth loss paid, and between approximately
25% and approximately 0% of the loss amount is paid for a fifth
loss paid.
[0066] In accordance with another aspect of the present invention,
the amount of the defense costs and the amount of loss amount paid
decreases with each subsequent loss paid.
[0067] Still other benefits and advantages of the invention will
become apparent to those skilled in the art upon a reading and understanding
of the following detailed specification.
IV. DESCRIPTION OF THE INVENTION
[0068] The present invention involves an insurance policy of the
type designed to insure multiple possible insurable events, and
which limits the number of insurable events to be indemnified by
the policy. For example, an insurance policy that indemnifies a
physician for loss due to medical malpractice, but which will only
respond to the first two, three, four, etc. claims that are made.
By design, this type of policy will protect the insurance company
from too many losses due to a chronically negligent physician. If
the physician is sued too many times, the insurance policy ceases
to indemnify them after a predetermined number of claims have been
made. The policy could track the claims on a first-reported basis,
on a date-of-incident basis, or on a date-loss-paid basis. Another
aspect of the present invention involves a policy as discussed in
this paragraph, which is combined with limits on the amount of indemnity
available financially on a per-incident, per-claim, per loss, and/or
policy-aggregate basis.
EXAMPLE 1
[0069] An insurance policy with $1,000,000 of coverage per claim,
with a total aggregate coverage of $3,000,000 is underwritten for
a physician. The insurance policy contains a clause wherein the
policy is terminated after three claims occur. For example, if the
physician has a claim for $250,000, a claim for $200,000, and a
claim for $500,000, the policy will be terminated. Even though,
in this example, the monetary limits of the policy have not been
exhausted, the policy is terminated because of the number of claims.
[0070] In another embodiment of this invention, the policy contains
a limitation clause, wherein the policy is limited after a specified
number of claims occur. The policy is limited either by the amount
of defense costs paid, the loss amount paid, or the policy is terminated.
EXAMPLE 2
[0071] An insurance policy with $1,000,000 of coverage per claim,
with a total aggregate coverage of $3,000,000 is underwritten for
a physician. The insurance policy contains a limitation clause wherein
the policy is limited gradually as subsequent claims occur. After
the first claim, up to 75% of the defense costs will be covered
for subsequent claims (subject to the $1,000,000/$3,000,000 maximums),
with the total loss amount being paid (subject to the $1,000,000/$3,000,000
maximums).
EXAMPLE 3
[0072] An insurance policy with $1,000,000 of coverage per claim,
with a total aggregate coverage of $3,000,000 is underwritten for
a physician. The insurance policy contains a limitation clause wherein
the policy is limited gradually as subsequent claims occur. After
the first claim, up to 75% of the loss amount will be covered for
subsequent claims (subject to the $1,000,000/$3,000,000 maximums),
with the total defense costs being paid (subject to the $1,000,000/$3,000,000
maximums).
EXAMPLE 4
[0073] An insurance policy with $1,000,000 of coverage per claim,
with a total aggregate coverage of $3,000,000 is underwritten for
a physician. The insurance policy contains a limitation clause wherein
the policy is limited gradually as subsequent claims occur. After
the first claim, up to 75% of the defense costs will be covered
for a second claim (subject to the $1,000,000/$3,000,000 maximums),
up to 50% of the defense costs will be covered for a third claim
(subject to the $1,000,000/$3,000,000 maximums), with the total
loss amount being paid (subject to the $1,000,000/$3,000,000 maximums).
EXAMPLE 5
[0074] An insurance policy with $1,000,000 of coverage per claim,
with a total aggregate coverage of $3,000,000 is underwritten for
a physician. The insurance policy contains a limitation clause wherein
the policy is limited gradually as subsequent claims occur. After
the first claim, up to 75% of the loss amount will be covered for
a second claim (subject to the $1,000,000/$3,000,000 maximums),
up to 50% of the loss amount will be covered for a third claim (subject
to the $1,000,000/$3,000,000 maximums), with the total defense costs
being paid (subject to the $1,000,000/$3,000,000 maximums).
EXAMPLE 6
[0075] An insurance policy with $1,000,000 of coverage per claim,
with a total aggregate coverage of $3,000,000 is underwritten for
a physician. The insurance policy contains a limitation clause wherein
the policy is limited gradually as subsequent claims occur. After
the first claim, up to 75% of the defense costs will be covered
for a second claim (subject to the $1,000,000/$3,000,000 maximums),
up to 50% of the defense costs will be covered for a third claim
(subject to the $1,000,000/$3,000,000 maximums), up to 25% of the
defense costs will be covered for a fourth claim (subject to the
$1,000,000/$3,000,000 maximums), with the total loss amount being
paid (subject to the $1,000,000/$3,000,000 maximums).
EXAMPLE 7
[0076] An insurance policy with $1,000,000 of coverage per claim,
with a total aggregate coverage of $3,000,000 is underwritten for
a physician. The insurance policy contains a limitation clause wherein
the policy is limited gradually as subsequent claims occur. After
the first claim, up to 75% of the loss amount will be covered for
a second claim (subject to the $1,000,000/$3,000,000 maximums),
up to 50% of the loss amount will be covered for a third claim (subject
to the $1,000,000/$3,000,000 maximums), up to 25% of the loss amount
will be covered for a fourth claim (subject to the $1,000,000/$3,000,000
maximums), with the total defense costs being paid (subject to the
$1,000,000/$3,000,000 maximums).
EXAMPLE 8
[0077] An insurance policy with $1,000,000 of coverage per claim,
with a total aggregate coverage of $3,000,000 is underwritten for
a physician. The insurance policy contains a limitation clause wherein
the policy is limited gradually as subsequent claims occur. After
the first claim, up to 75% of the loss amount will be covered (subject
to the $1,000,000/$3,000,000 maximums), and up to 75% of the defense
costs will be paid (subject to the $1,000,000/$3,000,000 maximums)
for subsequent claims.
EXAMPLE 9
[0078] An insurance policy with $1,000,000 of coverage per claim,
with a total aggregate coverage of $3,000,000 is underwritten for
a physician. The insurance policy contains a limitation clause wherein
the policy is limited gradually as subsequent claims occur. After
the first claim, up to 75% of the loss amount will be covered (subject
to the $1,000,000/$3,000,000 maximums), and up to 75% of the defense
costs will be paid (subject to the $1,000,000/$3,000,000 maximums)
for a second claim; up to 50% of the loss amount will be covered
(subject to the $1,000,000/$3,000,000 maximums), and up to 50% of
the defense costs will be paid (subject to the $1,000,000/$3,000,000
maximums) for a third claim.
EXAMPLE 10
[0079] An insurance policy with $1,000,000 of coverage per claim,
with a total aggregate coverage of $3,000,000 is underwritten for
a physician. The insurance policy contains a limitation clause wherein
the policy is limited gradually as subsequent claims occur. After
the first claim, up to 75% of the loss amount will be covered (subject
to the $1,000,000/$3,000,000 maximums), and up to 75% of the defense
costs will be paid (subject to the $1,000,000/$3,000,000 maximums)
for a second claim; up to 50% of the loss amount will be covered
(subject to the $1,000,000/$3,000,000 maximums), and up to 50% of
the defense costs will be paid (subject to the $1,000,000/$3,000,000
maximums) for a third claim; up to 25% of the loss amount will be
covered (subject to the $1,000,000/$3,000,000 maximums), and up
to 25% of the defense costs will be paid (subject to the $1,000,000/$3,000,000
maximums) for a fourth claim.
[0080] The above examples are merely embodiments of the present
invention, and are not intended to limit the invention in any manner.
It is to be understood that any type of insurance policy can be
used, any percentages, and any combination of number of claims,
defense costs, and loss amounts paid, can be used, as long as chosen
using sound business judgment. It is also to be understood that
the above embodiments can include limitations based upon the number
of incidents, as well as the number of losses paid. It is also to
be understood that the limitations and/or termination may apply
whether or not claims are paid to, or on behalf, of the policyholder.
[0081] In another embodiment of this invention, the policy could
be written so that the policy is limited to a certain number of
claims within a specified time period, such as twelve months. In
this embodiment, the policyholder may have a higher number of claims
than in the previous embodiment, as long as the claims are spread
out over a longer period of time. For example, a policy could be
written to limit, or terminate, the policy if more than two claims
occur within any twelve month period. It is to be understood that
the specific time limit to be chosen, as well as the number of claims,
incidences, or losses paid, is not intended to limit the invention
in any manner.
[0082] Another aspect of the present invention involves a reinsurance
treaty or facultative agreement, in which a re-insurer agrees to
indemnify the primary insurer against all losses for claims in excess
of a predetermined number of claims. Another aspect of the present
invention involves a reinsurance treaty or facultative reinsurance
agreement as discussed in this paragraph, which is combined with
limits on the amount of indemnity available financially on a per-incident,
per-claim, per loss, and/or policy-aggregate basis. For example,
the re-insurance policy could be written to insure the primary insurer
against all losses for any claims after the second claim. It is
to be understood that the number of claims is not intended to limit
the invention.
[0083] In another embodiment of the present invention, the amounts
of indemnification, by the insurer, changes with subsequent claims.
Varying limits of coverage would be offered for claims over a certain
number of claims. Another variation of this embodiment could encompass
the varying limits of coverage beginning after the first claim or
in any order.
[0084] As an example of the above embodiment, the insurance company
provides a policy that indemnifies the insured for up to $1,000,000
for the first claim, up to $500,000 for the second and third claims,
and up to $100,000 for the fourth claim. Another example would be
up to $1,000,000 for the first three claims and up to $500,000 for
any subsequent claims. The examples are not intended to limit the
invention in any manner. It is contemplated that any arrangement
of the varying limits of coverage is contemplated by this invention,
as long as chosen using sound business and insurance judgment. It
is also contemplated that this embodiment could be combined with
the previous embodiment, wherein the total number of claims allowed
is limited to a certain number, and the limits of coverage vary
with the subsequent claims.
[0085] The present invention provides for a policy that could cease
to indemnify a policyholder prior to exhausting the financial indemnification
limits of coverage, in the event that the number of claims indemnified
by the policy/insurer is first exhausted. For example, in one embodiment,
the policy provides for coverage of $1,000,000, but is limited to
three claims. So, even if the first claim is for $150,000, the second
claim is for $200,000, and third claim is for $400,000, the policy
is terminated, even though the policyholder did not reach the maximum
amount of coverage allowed by the policy.
[0086] In another embodiment of the present invention, an insurance
policy is provided that includes multiple different insurance payment
amounts. For example, a policy contains first payment amount of
$1,000,000, a second payment amount of $500,000, and a third payment
amount of $250,000. The payment amounts can be used for any number
of claims, and used in any order that is desired by the insured.
If two claims come in for a total of $200,000, the third payment
amount can be used to pay those, and the third payment amount would
have $50,000 remaining. If the next claim was for $300,000, either
the first or payment coverage amount would need to be used to cover
the $300,000. Variations of this embodiment could include each payment
amount covering one claim only, regardless of the amount paid, or
each payment amount could be for a specified number of claims.
EXAMPLE 11
[0087] A policy is underwritten having three payment amounts, such
as $1,000,000, $500,000, and $250,000. Each payment amount covers
only one claim. A first claim comes in for $175,000, and the third
payment amount is used. The remaining $75,000 of the third payment
amount cannot be used. A second claim would have to use either the
$1,000,000 or $500,000 regardless of the amount.
EXAMPLE 12
[0088] A policy is underwritten having three payment amounts, such
as $1,000,000, $500,000, and $250,000. The first payment amount
covers up to four (4) claims, the second payment amount covers up
to three (3) claims, and the third payment amount covers up to two
(2) claims. A first claim comes in for $175,000, and the third payment
amount is used. The third payment amount can cover one more claim
for up to $75,000. A second claim comes in for $800,000, and the
first payment amount is used. The first payment amount can cover
three more claims for up to a total of $200,000.
[0089] It is to be understood that the above embodiment can use
any payment amounts, any number of payment amounts, and any variation
of claims, incidences, or losses paid, as long as chosen using sound
business judgment.
[0090] It is to be understood that the present invention can encompass
a claims made tail policy within the above embodiments.
[0091] It is also to be understood that the terms first, second,
third, etc. as they apply to claims, incidences, losses paid, and/or
coverage amounts do not necessarily refer to chronological order.
[0092] It is also to be understood that the above percentages for
the defense costs and the loss amounts paid can be, but are not
limited to, the following: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28,
29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44,
45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60,
61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76,
77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92,
93, 94, 95, 96, 97, 98, 99, and 100.
[0093] The invention has been described with reference to several
embodiments. Obviously, modifications and alterations will occur
to others upon a reading and understanding of the specification.
It is intended by applicant to include all such modifications and
alterations insofar as they come within the scope of the appended
claims or the equivalents thereof.
[0094] Having thus described the invention, it is now claimed: |