What is an Insurance?
It is an insurance contract by which the insurer is obliged, through the collection of a premium, to compensate for a damage or to pay a sum of money upon verification of an eventuality foreseen in the contract. The insurance contract may have as its object all kinds of risks if there exists insurable interest, unless expressly prohibited by law.
The policyholder is obliged to make the payment of that premium, in exchange for the coverage granted by the insurer, which avoids facing greater economic damage, in case a covered loss occurs.
The insurance contract is consensual; the reciprocal rights and obligations of the insurer and policyholder begin as soon as the negotation is concluded, even before the "policy" or document that reflects data and conditions of the insurance contract is issued.
When an insurance contract is written, the objective is to obtain economic protection of goods or people that could in the future suffer losses.
What is the Premium?
The premium is the insurance cost established by an insurance company, calculated on the basis of actuarial and statistical calculations, taking into account the frequency and severity of the occurrence of similar events, the history of events that occurred to the client, and excluding the internal or external costs that said insurer has.
What is a Policy?
The policy is the written instrument in which the conditions of the contract are stated. The policy is the main document of the insurance contract, where the rights and obligations of the parties are recorded, it is a private document written in several pages.
Who is the Insurer?
The insurer is the legal entity that assumes the risk. It is duly authorized according to the laws and regulations.
What is the conditional obligation of the Insurer??
It is the duty of the insurer to pay the compensation to the beneficiaries in case of loss, according to the amounts, terms and conditions set forth in the contract.
What obligations does the Insurer have??
In addition to delivering the policy to the policyholder, the insurer has an important obligation that, in turn, is an essential element of the insurance contract: the payment of indemnizations. This is done after the insurer analyzes the situation of the loss on the basis of the current policy and its riders, determining that there is coverage.
A sample of the good faith of the insurer is to present the reasoned and fundamental objection that is to, inform the client in writing of the non-payment of the claim if there is something that indicates this position. This can happen in several cases, among them, not having in place the coverage that affected the loss, being out of policy period or not having paid the premium within the agreed term. Likewise, the insurer has a term to object to the claim, and its lack of compliance can submit it to an executive (legal) process, in addition it will have to pay late interest charges at the maximum rate in force at the time the payment is made (Article 1080 modified by law 45/90).
The doubt, the conjecture or the suspicion are not sufficient reasons for the insurance company to stop fulfilling its main obligation that is to indemnity the loss. The responsibility of the insurer is to collect evidence, documents as well as testimonies so that, with solid grounds, they can deny a claim.
Who is the Policyholder??
The policyholder is the individual or legal entity that contracts and subscribes the insurance policy, on its own behalf or on behalf of a third party, assuming the obligations and rights established in the contract. It seeks to transfer a certain risk to a third party (insurance company) in order to compensate him or a third party for damages or losses that may arise from the occurrence of an uncertain event at the date of the insurance contract. For this purpose, a remuneration (premium) must be paid to the insurer by the policy holder.
What are the obligations of the Policyholder?
Make a true statement of the facts or circumstances that determine the state of the risk, according to the questions that the insurer makes.
Maintain the state of risk. If there is any change in the risk conditions, the policyholder must report this new circumstance to the insurance company, within a stipulated period. Pay the premium. The initiation of the validity of the policy is conditioned to the payment of the premium. This means that the first payment is made at the same time the policy is taken; subsequently, for the renewal, the payment deadline will be the same due date or earlier if it is the policyholder's desire. If a loss occurs, they should prove the occurrence of the accident and notify the insurance company during the three days following the ocurrence.
Who is the Insured?
The insured can be defined as the holder of the area of interest that the insurance coverage concerns, and of the right to compensation in certain cases, can be transferred to the beneficiary.
It is the natural or legal person to whom the occurrence of the accident will affect more directly. In short, it is the one that the consequences of the loss will fall. The figure of the insured is essential within the insurance contract. As it can’t be conceived a contract of that nature without the existence of a risk to cover, it is not possible to think of a legal business of the aforementioned nature without there being a person or final recipient of the guarantee that is agreed, and whose interests, protected in this way, are the efficient cause of the contract.
Who is the Beneficiary?
The beneficiary is the person who will receive the benefits of the insurance when the event contemplated in it occurs (without being the named insured). It is the one where the benefits of the agreed policy fall, by the express will of the policyholder. The designation of the beneficiary responds to forecasting plans that correspond to personal insurance, especially life and personal accident insurance, in the event of death of the insured.
What is Insurable Risk?
In the language of insurance, the term risk is used to indifferently express two different ideas. On the one hand, risk as the insured object; on the other hand, risk as a possible occurrence by chance of an event that produces an economic need and whose actual appearance or existence is prevented and guaranteed in the policy. In the latter case, the risk obliges the insurer to make the corresponding provision or compensation. Risk: uncertain event that does not depend exclusively on the will of the policyholder, the insured or the beneficiary and whose realization gives rise to the obligation of the insurer (Article 1054 Commercial Code).
What is a Claim?
It is the concrete manifestation or realization of the insured risk, which produces damages covered by the policy up to a certain amount.
What does it mean that a contract is random?
An insurance contract is random because there is no certainty of when the insured risk may occur; in other words, events for which insurance is taken depends on a future and uncertain fact. Random: one of the attributes of the insurance contract that consists in that its exercise depends on a fortuitous event (chance).
What is the successive execution of the contract?
This last characteristic refers to the fact that the contract is not executed immediately, but rather it develops during predetermined and continuous periods, usually one year. During that time the company assumes the insured risk and covers all events. In short, the execution is continuous and not instantaneous. Validity: term that begins with the date of initiation of the policy and ends on the expiry date.
Characteristics of an insurance contract
According to jurisprudence and doctrine, the characteristics of a contract of the Integral contract are: adhesion, good faith per excellence, its purely compensatory.
Next we will study those characteristics:
What does Adhesion mean?
Adherence, as a characteristic of a contract, means that when buying the insurance, the client accepts the coverages, clauses and exclusions set by the insurer in the policies. That is, if he wants to acquire the policy, he must accept and accept those conditions.
What does the Good Faith per excellence mean?
For the Supreme Court of Justice, good faith translates into acting with loyalty, rectitude, panel, honesty. That is to say, it is an attitude guided by a spirit of justice and equity.
Good faith must be present in all types of contracts. However, this concept acquires a special connotation in the field of insurance because, unlike contracts in which the ability to negotiate can be protected by law, in our case the basis is good faith, both for customers as well as the insurance company, and those who do not act in accordance with it are drastically sanctioned.
An insurance contract is in good faith per excellence. This means that both the insurer and the policyholder must provide all the necessary information at the time of the application and the issuance of the insurance, in order to offer clarity and transparency and thus avoid injury to the other. This principle allows insurance businesses to be made on the basis of mutual trust, stability and credibility. This also means that any attempt against good faith is sanctioned.
What is an Indemnity?
Sum that, limited to the value agreed in the policy, covers damages suffered by the insured property in an covered loss. It is calculated based on the commercial value or replacement value, and taking into account the date of occurrence of the loss. It is also the effective amount of the patrimonial damage suffered by the insured or consequence of an accident (Article 1079 and 1089 Commercial Code).
What is a indemnification contract?
An insurance contract is intended only to compensate or repair the damages of an economic nature that the insured suffers as a result of an accident. The insurance, in any case, is not a source of enrichment,it can’t be used to make a profit, or take advantage of a loss.
In other words, the insurance seeks to recover the insured from the economic damage suffered as a result of a loss which risk was secured.
What does it mean that a contract is based on a person's consideration?
At the time of subscribing insurance, the moral element plays a very important role. When the insurance company receives an application, they analyze the qualities of the person who is going to be insured and on that basis of their study issues a policy. Therefore, it is said that insurance companies subscribe the policy in favor of a particular person.
Without knowing and studying the qualities of people who request insurance, the insurer cannot define the execution of a contract or celebrate it under other conditions.
The contract is of a personal nature and therefore ceases its effects at the time the insured sells, transfers or transfers the vehicle to another person. Naturally, this new person may take another policy in your name.
What is Reticence?
Voluntary omission. The policyholder is obliged to state in a transparent manner the facts or circumstances that determine the risk status, according to the questionnaire proposed by the insurer. The evidence about the inaccuracy in the information of the facts or reluctance are circumstances that lead to the relative nullity of the insurance (Article 1058 Commercial Code). The celebratim circumstances could have established more onerous conditions at the initial moment of conclusion of the contract.
What is a Claim?
Claim made by the insured to the insurer due to the occurrence of an accident, through which the payment of compensation is required, in accordance with the terms and conditions defined in the insurance contract.
The insured must demonstrate the occurrence of the loss, as well as the amount of the loss, if applicable. For this reason, must obtain, on their own, and deliver or show all the details, books, receipts, invoices, supporting documents, minutes and any information that the insurer is entitled to demand with reference to the claim, origin, cause and circumstances under which the loss occurred. This way the liability of the insurer can be established for the amount of compensation.
