Answer ... The respective obligations and liabilities of the insurer and insured, both on concluding an insurance contract and during its term, as well as the consequences of their breach, are as follows.
Insured: Under the Civil Obligations Act, the principal obligations of the insured are:
- the duty of disclosure;
- payment of the premium; and
- notification of occurrence of the insured event.
Prior to execution of the insurance contract, the insured must disclose all material circumstances significant for the rating of risk of which the insured is aware or could not have been unaware.
After execution of the contract, different disclosure obligations apply in the case of insurance of property and insurance of persons:
- In the case of insurance of property, the insured is due to disclose any change in circumstances which might be significant for the rating of risk; and
- In the case of insurance of persons, the obligation of disclosure exists only if the risk has increased due to a change in the person’s occupation.
The Civil Obligations Act prescribes different remedies which are available to the insurer in case of misrepresentation/non-disclosure, depending on whether the misrepresentation/non-disclosure was intentional.
If the premium is to be paid simultaneously with execution of the insurance contract, the insurer’s obligation to pay the insurance claim arises the day after payment of the premium.
If the insured’s obligation to pay the premium falls due after execution of the contract, the insurer’s obligation to pay the insurance claim arises on the first day of the period of cover. If the insured is in default, the insurance contract is automatically terminated once 30 days have expired from the later of:
- the day of the maturity of the obligation to pay the premium; or
- the day on which the insured received the insurer’s notice of maturity of premium.
The occurrence of the insured event must be notified within three days. The deadline does not apply to life insurances. If the notification is not timely, the insured is liable for any damage which the insurer might incur due to the delay in notification.
Insurer: Under the Civil Obligation Act, the insurer’s main obligation is to pay the insurance claim in case of an insured event.
The insurance claim must be paid by the deadline agreed in the insurance contract, which cannot be longer than 14 days counting from the date of receipt of the notice of the insured event.
However, if the insurer requires additional time to determine its obligation to pay the insurance claim, the deadline is 30 days. Alternatively, within that same period, the insurer may notify the insured that the claim is rejected as groundless.
If the amount of the insurance claim to be paid is not determined within the deadline, but the insured’s claim is grounded, the insurer must pay the undisputed amount of the insurance claim as an advance.
The insurer is not obliged to pay the insurance claim if the insured caused the insured event intentionally or by committing fraud.