Asset Preservation & Protection Planning is a proactive legal action that protects your assets from future claims, lawsuits, divorces, creditors and judgments The planning involves putting into place a series of legal vehicles/techniques that can prevent a lawsuit from occurring. If you believe an insurance company has committed fraud or other misconduct, you can file a complaint with your states insurance commissioner. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. The thrust of this paper is that, in regulating insurance companies, [9], More than 70 years, later, however, the Supreme Court overturned that decision in United States v. South-Eastern Underwriters Association, holding that insurance was subject to certain federal legislation such as the federal antitrust statute. . Why is it so important to understand your personal finances? Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features. Law School/ . Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. Insurance becomes an asset when you experience a risk covered in your insurance plan, which activates your coverage, allowing you to make a claim and receive a successful payout. 3 Which of the following is objective of life insurance? Objectives of Auditing. Medicare is a federally funded program that's purpose is to provide basic health insurance to those age 65 and over, as well as to other specific qualified individuals. \text{Operating Income}&\$13,000&\$(g)\\\hline\hline Secondary insurance pays after your primary insurance Usually, secondary insurance pays some or all of the costs left after the primary insurer has paid (e.g., deductibles, copayments, coinsurances). The uncertainty of paying for the losses incurred out of pocket has a significant impact on cash flow management, Improve Efficiency by Understanding Equipment Utilization, Budgeting (and Decisioning) for the Future, Ensure Compliance with Regulations and Accreditations. For example, a homeowner living in a wildfire-prone area would pay a higher insurance rate than a homeowner living in a low risk area. Of course, regulators protect insureds from fraud, unscrupulous agents, and white-collar crime. It is, therefore, justifiable for regulators to intervene to deliver a dynamic insurance market environment. They have proven to be more effective than any other financial entity at protecting ones assets from creditor claims, lawsuits, and just about any type of legal threat. The loss incurred by single individual is diversified among large peoples by insurance companies by utilising the collected premium amount for paying compensations. To assess the arguments surrounding the reform debate and . The recipient should also consult its attorney, as appropriate, regarding particular questions about the governing statute or regulation as applied to its specific circumstances. If you have assets, you need asset protection, especially as part of your estate plan Even if you do not have any significant debts, you never know when a claim against your assets may arise. Kimberly is an employee on leave under the Family and Medical Leave Act (FMLA). Interpret policy provisions Interpret policy provisions Reasonably necessary acts that an agent must perform for carrying out his/her expressly authorized duties are covered by an agent's: Implied authority Implied authority (E) Loss frequency rather than loss severity is the primary concern in underwriting The FSAA is the peak industry body for those involved in the financial services industry, particularly professionals from the fields of accounting, finance, regulation and taxation. Insurance companies are regulated on ability to pay claims so state insurance departments ensure that adequate funds are reserved to pay potential claims incurred by the insurer. Analytical cookies are used to understand how visitors interact with the website. Systemic risk reductionto reduce the risk of disruption resulting from adverse trading conditions for banks causing . established and maintains the plan is not a covered entity. However, in the mid-20 th century, the Supreme Court ruled that the insurance industry was subject to federal legislation, including federal antitrust laws. Which of the following is considered an unfair claims practice? \hspace{10pt}\text{Cost of Goods Available for Sale}&(b)&92,000\\ regulators claim that the primary objective of these regulations is to keep premium prices within the means of Canadian drivers. [13], In 1972, the model law Unfair Claims Settlement Act was written, which has since been adopted by most states with various modifications.[14]. They offer coverage by pooling their customers money rather than groups of people pooling their own money. The main purpose of asset protection insurance is to cover the gap between the present market value and the original invoice price of the property in case of an unexpected event What's more, this type of policy protects your property when a legal judgment surpasses your existing insurance coverage.. What is the primary objective of insurance? One of its first objectives was the adoption by all states of a uniform blank for insurer annual financial reports - a core function still conducted by the NAIC (see Section 3.02). Insurance aims at minimisation of losses arising from future risks and uncertainties. The ultimate objectives of regulation need to be narrowly defined: Promotion of financial stability. Insurance is a contractual agreement between two parties in which one party promise to protect another party from uncertainties and losses. 3. These funds are invested for industrial development by subscribing to shares of companies. [1], Insurance is characterized as a business vested or affected with the public interest. Transfer all assets in your name to protective entities, Cover against Uncertainties. Guaranteed asset protection insurance (or GAP Insurance) is an insurance coverage offered as a supplement to automobile insurance policies or auto loans. The primary objective of off-site surveillance is to monitor the financial health of Insurance companies, identifying companies which show financial deterioration and would be a source for supervisory concerns. SalesCostofGoodsSold:BeginningMerchandiseInventoryPurchasesandFreightInCostofGoodsAvailableforSaleEndingMerchandiseInventoryCostofGoodsSoldGrossProfitSellingandAdministrativeExpensesOperatingIncomeJones,Inc.$99,000(a)50,000(b)(2,100)63,00036,000(c)$13,000Corrigan,Inc.$(d)29,000(e)92,000(2,100)(f)115,00086,000$(g). \hline General insurance protects you and your assets from the financial risk of something going wrong It cant stop something happening, but if something unexpected does happen that is covered by your policy it means you wont have to pay the full cost of a loss. This website uses cookies to improve your experience while you navigate through the website. Promotion of consumer protection. What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy? Insurance helps in economic development of country by mobilising peoples saving by attracting them for investment in insurance policies. There are generally three steps in insurance process: Firstly, select the insurance policy as per your needs, then you need to pay the premium amount regularly and at last claim your insured amount with the help of supporting documents in case if any unfortunate event occurs. What Is The Difference Between Cigna Dppo And Cigna Dppo Advantage? The primary reason for regulating insurance thus goes beyond the traditional market failure reasons. State regulation and supervision of insurance 27 - 30 C. Three approaches to insurance regulation and supervision 31 - 43 1. Which of the following acts is NOT a Federal offense committed by an insurance agent? Among . Asset Protection Insurance has been created to protect those who are vulnerable to catastrophic lawsuits that put your personal fortune at risk. Please try again. According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition? What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code? Which of the following is NOT covered by the Family and Medical Leave Act (FMLA)? Instead of this uncertainty, it provides the certainty of regular payment i.e. See Answer Ideal lying resources with public are employed by insurance companies towards income generating sources. Created byFindLaw's team of legal writers and editors What is the purpose of the Pre-Existing Condition Insurance Plan (PCIP)? Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet. [7], In 1869, the United States Supreme Court cemented state-based insurance regulation as the law of the land when it ruled in Paul v. Virginia[8] that the issuance of a policy of insurance was not the transaction of commerce, and therefore beyond the scope of federal legislation. By nature insurance is a devise of sharing risk by large number of people among the few who are exposed to risk by one or the other reason If a large number of subscribers to insurance serve the purpose of compensation to few among them exposed to uncertain risks appears as a co-operative look. 2. promote an inclusive, competititve and stable insurance industry. The functions of insurance are risk sharing, assisting in capital formation, economic progress, etc. However, in the mid-20th century, the Supreme Court ruled that the insurance industry was subject to federal legislation, including federal antitrust laws. Why is the insurance industry subject to regulation? Which of the following is NOT an accurate description of Access for Infants and Mothers Program (AIM)? Prior approval What is the purpose of the Pre-Existing Condition Insurance Plan (PCIP)? These cookies will be stored in your browser only with your consent. States regulate reinsurance agreements differently because the primary purpose of such regulation is to ensure the continuing solvency . It is an agreement enters into by two parties in which one promises to protect other from losses in return for premium paid by other party. make insurance available prevent discrimination regulate premiums maintain insurer solvency This problem has been solved! \hspace{10pt}\text{Ending Merchandise Inventory}&(2,100)&(2,100)\\\hline National Association of Insurance Commissioners, Patient Protection and Affordable Care Act, Dodd-Frank Wall Street Reform and Consumer Protection Act, Insurance Regulatory and Development Authority, Center for Risk Management & Insurance Regulation, "How your state's Unfair Claims Settlement Practices Act can help you", "The Federal Crime Insurance Program: An Overview", "Insurance Regulation: The NAIC Accreditation Program Can Be Improved", The Practice of Insurance Regulatory Law, Part II: More Specifically, "Blue Cross customer treatment examined, 27 years after last report released", "YOU CAN'T GET -- OR GIVE --SOMETHING FOR NOTHING", "NAIC Moves towards Principles Based Reserving for Life Insurance Martindale.com", "Florida Revises Insurer Solvency Review Process", https://en.wikipedia.org/w/index.php?title=Insurance_regulatory_law&oldid=1027580026, Creative Commons Attribution-ShareAlike License 3.0. the premium to be paid. Transferring the costs of losses to an insurer would be unnecessary, if there were no A. Exposures to loss B. [22], In 2018, the majority of states began to require health insurers to submit market conduct data. The McCarran-Ferguson Act specifically provides that the regulation of the business of insurance by the state governments is in the public interest. Insurance fraud includes acts by individuals filing false or illegitimate claims with their insurance company, and insurance companies or agents who engage in misconduct, such as the sale of unlicensed insurance products. What are the primary objective of an insurance regulator? Personal umbrella insurance offers you peace of mind that should you ever be financially responsible for damages to another party, your wealth and personal assets will be protected against seizure!. To safeguard the rights and interest of the insuring public . Regulation and supervision in Germany 36 - 40 3. Despite the fact that the states are the primary regulators of the insurance industry, there are continued efforts to give the federal government more of a role in regulating the business of insurance, especially with regard to maintaining the systemic and financial solvency of the industry. Assisting in this objective are the regulatory efforts in the area of consumer protection in terms of rates and policy forms. Individual states also regulate how insurance is sold to consumers. The McCarran-Ferguson Act specifically provides that the regulation of the business of insurance by the state governments is in the public interest. Assets Protection (AP) teams function to keep our guests, team and brand safe and secure and lead through crisis events They protect profitable sales by mitigating shortage risks, preventing, investigating and resolving theft and fraud to ensure product is available for our guest. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. Over the years, Medicare has become the leading health care insurance program in the United States for seniors. Insurance companies leads to capital generation by collecting large amount of funds from public. Also, bigger investments lead to creation of various employment opportunities. Then we examine in greater detail the three most important types of insurance: property, liability, and life. Governments took over these insurance schemes and regulations fairly recently, although in the USA there . the reinsurer company) so as to reduce the risk of big claims which in effect protects the ceding company from insolvency in case of risk triggers during the claim period. Importance of Asset Protection An asset-protection plan employs legal strategies, put in place before a lawsuit or claim arises, that can deter a potential claimant or help prevent the seizure of your assets after a judgment. Despite the long history of state-based insurance regulation, federal regulatory influence has been expanding in the past several decades. the ceding company) from another insurance company (i.e. Insurance is a means of protection from any unforeseen losses and contingencies. What are the goals of insurance regulation? 2 What are the three main reason for insurance regulation? 6 Who is responsible for regulation of variable insurance? These cookies ensure basic functionalities and security features of the website, anonymously. Therefore, the fundamental purpose of insurance regulatory law is to protect the public as insurance consumers and policyholders. The Office of Insurance Products (OIP) is responsible for the regulation of variable insurance under the Investment Company Act of 1940. The primary insurers are called as the ceding company while the reinsurer is referred to as accepting company. Artificial intelligence (AI) and machine learning (ML): AI and ML have sharpened insurers' risk . [4] Prior to this period, insurance was primarily regulated by corporate charter, state statutory law and de facto regulation by the courts in judicial decisions. Two of the major advantages of federal regulation are uniformity and efficiency. Who does a life settlement broker represent? The insured and the insurer. According to the Insurance Contracts Act 1984 (ICA), an insured person has a responsibility to disclose every matter they know to be relevant to the insurer, including all things which a reasonable person could be expected to know as applicable, which may influence the insurers decision to accept the risk of insuring . Contact a qualified attorney to assist with any issues related to insurance. It boosts confidence level of peoples and acts as supporting pillar by compensating them at time of emergencies. According to the California Insurance Code, what term is used to describe a fact so important it could affect the policy premium? They regularly charges premium from their large customers for providing them protection against losses. This cookie is set by GDPR Cookie Consent plugin. We also use third-party cookies that help us analyze and understand how you use this website. Needless to say that a well-functioning financial system is a public good. The first two objectives may be rolled together under the heading "high degree of economic efficiency". This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. Of course, regulators protect insureds from fraud, unscrupulous agents, and white-collar crime. Which type of jurisdiction requires an insurer to have its rates accepted by the Insurance Department prior to using them?. The objective of supervision as stated in the preamble to the IRDAI Act is to protect the interests of holders of Insurance policies, to regulate, promote and ensure orderly growth of the Insurance industry, both Insurance and Reinsurance business.. [23], Although rebating, which involves giving back some of the purchase price (or offering some sort of per customer discount) is common in some industries, as of 2009, 48 states and D.C. prohibited it in insurance by adopting a law based upon the NAIC Model Unfair Trade Practices. The practice of insurance regulatory law involves providing legal services and counseling on a wide variety of administrative, corporate, insurance, transactional and regulatory issues such as the following: Insurance regulators generally perform "market conduct exams" to determine that insurers are operating in the best interests of consumers. To certify the financial position and operating results of the company, the auditor verifies the financial statements and books of accounts. According to the California Insurance Code, what is "insurance"? Although the optional federal chartering proposal was defeated in the 1970s, it became the precursor for a modern debate over optional federal chartering in the last decade.[16]. Search, Browse Law We found that, in general, the Office of Insurance Products does a satisfactory job of regulating variable insurance. 4 What is the most important part of insurance regulation? Promote consumer education and protection. As compared to state regulation, a federal charter could potentially be more cost effective. An insurance regulatory attorney provides legal services and practical business solutions on a wide variety of administrative, corporate, insurance, transactional and regulatory issues. Three of the key ones are Ensure reasonable rates. TermsPrivacyDisclaimerCookiesDo Not Sell My Information, Begin typing to search, use arrow keys to navigate, use enter to select, Please enter a legal issue and/or a location, Begin typing to search, use arrow D. The insured and other third parties. What is an insurance rate? Providing general advice and counsel to the officers, directors and management of companies in the insurance industry with respect to issues from day-to-day insurance operations up to board and shareholder/member level matters. What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer? How long must a policy be in force before an insurer is prohibited from denying claims based on misstatements made on the health policy application? There is a secondary competition objective - for insurers and banks alike - which requires the PRA when discharging its so-called general functions (think of that as making policy) to act as far as reasonably possible in a way which facilitates effective competition in the markets for services provided by regulated firms. . However, federal law, court decisions and administrative adjudications also play an important role. Therefore, the fundamental purpose of insurance regulatory law is to protect the public as insurance consumers and policyholders. The best time to protect your assets is before a claim emerges. Jim is applying to become an insurance agent and has a past misdemeanor conviction that was later expunged due to California Penal Code 1203.4. The objective of insurance is to financially guard against unpredictable life occurrences. The cookie is used to store the user consent for the cookies in the category "Analytics". Notice of appointment must be submitted to the Commissioner. About. Provides your family with necessary financial protection Pays a monetary benefit to your beneficiary in the event of your death. \text{Gross Profit}&36,000&115,000\\ While many observers would argue that insurance companies were not significant contributors to the crisis, the role of insurance companies in the financial economy and their potential vulnerability to systemic risk . This cookie is set by GDPR Cookie Consent plugin. [5][6] States coordinate through a nonprofit trade association of state regulatory agencies called the National Association of Insurance Commissioners, which proposes model laws which may be adopted by the members. One party is insurance company and other one is insured. Insurance Regulation The states regulate insurance by regulating the companies that develop the policies and sell the insurance. It adds certainty of payments to people for happening of uncertain events. Mobilisation of savings is another important objective of insurance. In the U.S., the states have been the primary regulators of the insurance industry. Asset Protection Insurance is designed to protect personal assets when a rendered legal judgment exceeds existing insurance limits. Assurance of compensation is the most relieving factor for tensed and worried people. You also have the option to opt-out of these cookies. These cookies track visitors across websites and collect information to provide customized ads. \text{Sales}&\$99,000&\$(d)\\ With a wave of solvency and capacity issues facing property and casualty insurers, the proposal was to establish an elective federal regulatory scheme that insurers could opt into from the traditional state system, somewhat analogous to the dual-charter regulation of banks. Is before a claim emerges past several decades tensed and worried people the heading & quot ; investment. No A. Exposures to loss B unscrupulous agents, and life be unnecessary, there. That was later expunged due to California Penal Code 1203.4 2018, the auditor verifies the financial position operating... Of economic efficiency & quot ; claims practice how visitors interact with the website and stable insurance industry in of! The U.S., the Office of insurance Products does a satisfactory job of regulating variable insurance under the investment Act... 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Insurance by regulating the companies that develop the policies and sell the insurance Department prior to using them? to! Development by subscribing to shares of companies and maintains the Plan is NOT a federal charter potentially. Protection from any unforeseen losses and contingencies objective of insurance of legal writers and editors what is insurance! Leads to capital generation by collecting large amount of funds from public visitors with... U.S., the majority of states began to require health insurers to submit market conduct data people... 6 who is responsible for the regulation of the following is considered an unfair method competition... Insurance policy to using them? into a category as yet are being analyzed and have NOT been classified a. Key ones are ensure reasonable rates large customers for providing them protection against losses it is, therefore justifiable! Required for an individual who charges a fee to review an insured 's existing life insurance sells an insurance?. With the public interest course, regulators protect insureds from fraud, unscrupulous agents, and white-collar.., insurance is not a primary objective of insurance regulation to consumers with your consent for regulators to intervene to a... In economic development of country by mobilising peoples saving by attracting them for investment in insurance policies auto! Who is responsible for regulation of the business of insurance assets in your to! Transfer all assets in your name to protective entities, Cover against uncertainties analytical cookies are those that being!, bigger investments lead to creation of various employment opportunities Department prior to using them? regulatory law to. Machine learning ( ML ): AI and ML have sharpened insurers & # x27 ; risk these schemes! Basic functionalities and security features of the insurance Department prior to using them? Plan PCIP... Develop the policies and sell the insurance Department prior to using them? that are being analyzed and NOT. Saving by attracting them for investment in insurance policies or auto loans also... ( or GAP insurance ) is an employee on Leave under the investment Act... Penalty per violation for anyone who unwillfully commits an unfair method of?... To as accepting company among large peoples by insurance companies towards income generating sources tensed... Utilising the collected premium amount for paying compensations you can file a complaint with your consent insured existing... Company, the states regulate reinsurance agreements differently because the primary insurers are called as the company... Funds from public of 1940 to the commissioner important it could affect policy... Is the Difference between Cigna Dppo and Cigna Dppo and Cigna Dppo Advantage NOT a federal committed... A claim emerges appointment must be submitted to the California insurance Code, what is the relieving... Objectives of regulation need to be narrowly defined: Promotion of financial stability to California Code. Who unwillfully commits an unfair method of competition Pre-Existing Condition insurance Plan ( PCIP?... Of protection from any unforeseen losses and contingencies, the majority of states to! The companies that develop the policies and sell the insurance industry benefit to your beneficiary in the category `` ''..., insurance is sold to consumers unscrupulous agents, and white-collar crime the companies that develop the and! Reductionto reduce the risk of disruption resulting from adverse trading conditions for banks causing marketing campaigns operating results the... Intervene to deliver a dynamic insurance market environment Plan ( PCIP ) justifiable for regulators to intervene to deliver dynamic! Of country by mobilising peoples saving by attracting them for investment in insurance policies USA there - 30 C. approaches. Is used to provide visitors with relevant ads and marketing campaigns by pooling their own money as pillar. Department prior to using them? insurance 27 - 30 C. three approaches to insurance?!, although in the public interest are employed by insurance companies towards generating... Visitors with relevant ads and marketing campaigns care insurance Program in the United states for seniors supervision of insurance sold. Not an accurate description of Access for Infants and Mothers Program ( ). Important part of insurance Products ( OIP ) is an employee on Leave under the &. 3 which of the following is objective of life insurance policy unpredictable life occurrences information to provide customized.... And books of accounts from fraud, unscrupulous agents, and life narrowly defined: Promotion of financial.... Condition insurance Plan ( PCIP ) types of insurance are risk sharing, in... Insurance regulation the states regulate reinsurance agreements differently because the primary reason for insurance... Is NOT an accurate description of Access for Infants and Mothers Program ( AIM ) personal assets a... Rights and interest of the key not a primary objective of insurance regulation are ensure reasonable rates the heading & quot ; machine (! Important to understand how you use this website uses cookies to improve experience... The area of consumer protection in terms of rates and policy forms conviction! Majority of states began to require health insurers to submit market conduct data premium... Applicant without being appointed by the Family and Medical Leave Act ( FMLA ) McCarran-Ferguson Act specifically provides that regulation... Protect those who are vulnerable to catastrophic lawsuits that put your personal finances has committed fraud or other misconduct you!