Insurer

Pays a stated fixed amount when the insured event occurs, without measuring the actual economic loss — Under a valued contract, the parties agree in advance on the amount payable when the event occurs — the face amount of the life policy — regardless of the beneficiary's actual financial loss. Indemnity contracts, such as many property policies, reimburse only the actual loss up to the policy limit. Because a human life has no measurable market value, life insurance is written as a valued contract and pays the stated benefit upon death.

National insurance concept

Contract law — An insurance policy is a contract, so disputes about coverage, conditions, and benefits are decided under contract law principles — offer, acceptance, consideration, and performance of promises. Tort law governs civil wrongs such as negligence, which is not the basis of a claim-payment dispute. Recognizing whether a matter sounds in contract or tort determines which rules and remedies apply to the dispute.

National insurance concept