Insurance Law 2.pptx PDF

CLASSIFICATION Property Insurance and Personal Insurance(Insurance of Persons) (‫التأمين على‬ ‫)االشخاص‬ Insurance is classified into property insurance and personal insurance, based on the subject matter of the insured risk. 1. If the subject of the insured risk is the person of the insured, the...

CLASSIFICATION Property Insurance and Personal Insurance(Insurance of Persons) (‫التأمين على‬ ‫)االشخاص‬ Insurance is classified into property insurance and personal insurance, based on the subject matter of the insured risk. 1. If the subject of the insured risk is the person of the insured, the insurance falls under personal insurance. 2. If the subject of the insured risk is the financial assets of the insured, the insurance falls under property insurance. CLASSIFICATION First: Property Insurance Property insurance is characterized by its compensatory nature, as its primary objective is to safeguard the insured from the harmful consequences affecting their assets due to the occurrence of the insured risk. If the insured property sustains losses due to the realization of the insured risk, the positive elements of the insured's financial estate diminish. In such cases, the insurer is obligated to remedy this reduction by compensating the insured for the incurred losses. CLASSIFICATION First: Property Insurance Since this type of insurance is compensatory, the general principle is that compensation is determined based on the extent of the damage. Consequently, the insured amount depends on the actual damages sustained by the insured as a result of the insured risk. CLASSIFICATION First: Property Insurance For instance, if an individual (the insured) enters into an insurance contract with an insurance company (the insurer) to insure their residence against the risk of fire, with a stipulated maximum insurance amount of AED 100,000, and during the insurance period, the residence sustains fire damage amounting to AED 100,000, the insured is entitled to compensation equivalent to the damages incurred. In this case, the insurer is only obligated to compensate for the damages up to the insured amount. If this amount is specified in the insurance contract (the insurance policy) as a maximum limit—as in the example above—the insurer is required to compensate the insured for the damages incurred to their property, but only within the specified insurance amount, even if the actual damages exceed this limit. CLASSIFICATION First: Property Insurance However, if the value of the damages is less than the insured amount—e.g., if in the previous example, the damages amounted to AED 50,000 instead of AED 100,000—the insurer is only obligated to pay an amount equivalent to the value of the damages Under this type of insurance, the insurer is obligated to compensate the insured or the beneficiary with the lesser of the two values if a maximum insured amount is specified. Property insurance focuses on the insured's financial estate rather than their personal identity. It provides coverage against damages to their financial estate, whether these damages affect its positive aspects (assets) or negative aspects (liabilities). CLASSIFICATION First: Property Insurance Types of Property Insurance: 1- Insurance on Assets (Property Insurance): This type covers damages affecting the positive side of the insured's financial estate, such as loss or damage to physical property. 2- Liability Insurance: This type provides coverage for damages that impact the negative side of the insured's financial estate, typically arising from legal liability to third parties. CLASSIFICATION 1- Insurance on Assets (Property Insurance): This type of insurance aims to compensate the insured for the damage caused to their financial estate due to the insured item being exposed to the insured risk. The contractual relationship under this type of insurance is established between the insurer and the insured.Property insurance varies depending on the risk that may threaten the insured items CLASSIFICATION 1- Insurance on Assets (Property Insurance): For example, if the risk is theft, fire, car damage, or crop destruction due to frost, the insurance is referred to as theft insurance, fire insurance, etc. CLASSIFICATION 1- Insurance on Assets (Property Insurance): The Dubai Court of Cassation has consistently ruled that 1- Fire insurance is a compensatory contract aiming to indemnify the insured—or the beneficiary of the insurance—for damages arising from fire and directly resulting from it, within the limits of the actual damage suffered by the beneficiary. CLASSIFICATION 2- The indemnity does not extend to third-party damages unless the insurance contract explicitly includes coverage for the insured's civil liability. 3- Insurance contracts are time-bound agreements where the duration is critical. Insurance coverage applies only during the specified period, beginning from the effective start date and ending on the final day of coverage. It does not extend to damages from fires occurring after the policy term ends unless otherwise agreed. CLASSIFICATION The Dubai Court of Cassation has consistently established that the purpose of property insurance is to compensate the insured or beneficiary for the damage incurred as a result of the insured risk materializing, strictly within the limits of the actual damage. CLASSIFICATION If the parties to the insurance contract agree on a specific insurance amount, such agreement represents the maximum compensation the insurer is obligated to pay. This predetermined amount serves as a presumption of the damage's value. However, the insurer is permitted to challenge this presumption by proving that the value of the damaged property is less than the maximum compensation agreed upon. In such a case, the insured or beneficiary is compensated only for the actual value of the damaged property. This ensures that they do not unjustly enrich themselves by receiving compensation exceeding the damage they have genuinely incurred. CLASSIFICATION 2- Liability Insurance (Debt Insurance) This harm may arise from: 1.Acts of Others for whom one is responsible (liability for the acts of others) 2.Acts of Objects under one’s control (liability for objects). CLASSIFICATION 2- Liability Insurance (Debt Insurance) Such occurrences lead to the individual's liability and the obligation to compensate for damages. To protect themselves from the risk of compensation claims, individuals resort to liability insurance. When the insured risk of being held liable for compensation materializes, the insurer is obligated to pay the compensation to the person designated in the insurance contract or as determined by law. CLASSIFICATION 2- Liability Insurance (Debt Insurance) Liability insurance protects individuals against financial losses resulting from liability claims. Examples include: Automobile liability insurance Professional liability insurance Environmental liability insurance CLASSIFICATION Federal Decree-Law No. (48) of 2023 Regulating Insurance Activities Article (4) The insurance business shall be divided into the following types: 1. Insurance of Persons and fund accumulation operations; and 2. Property and liability insurance. CLASSIFICATION 2. Property and liability insurance. Fire insurance and the allied perils. Land transport, marine and air cargo insurance and the related liabilities. Marine hull, machinery, and equipment insurance and the related liabilities. Aviation hull insurance and the like and their machineries and equipment and the related liabilities. Satellites, balloons and spaceships insurance, and their machineries and equipment and the related liabilities. Railway locomotives and coaches insurance and the related liabilities. Land vehicles insurance and the related liabilities. Engineering insurance and the related liabilities and insurances normally associated thereto. Oil insurance including the insurances which are normally considered oil insurance. CLASSIFICATION 2. Property and liability insurance Miscellaneous accident insurance including the following types: 1. Personal accident insurance. 2. Guarantee insurance and fidelity guarantee. 3. Money, coins, securities, bonds and the like insurances whether during transport or in safe. 4. Robbery and theft insurance. 5. Glass insurance. 6. Professional indemnity insurance including liabilties of those professionals in the fields of health, engineering, finance, accountancy, law and the other professions. 7. Workman's compensation and employer liability insurance. 8. Agriculture and livestock insurance and insurance of other animals. CLASSIFICATION Key Characteristics of Liability Insurance 1.Compensation Obligation: The insurer in this type of insurance does not compensate the third party (the injured party) directly for their damage. Instead, the insurer fulfills the compensation obligation that falls upon the insured due to the insured risk. While the damage incurred by the injured party triggers the insured's liability, it is not the direct cause of the insurer's obligation to pay compensation. CLASSIFICATION Key Characteristics of Liability Insurance 2.Triangular Relationship: Although liability insurance is a contract between two parties (the insurer and the insured), a third-party beneficiary (the injured party) may arise if: 1. The insurance contract designates the injured party as the beneficiary (stipulation for the benefit of a third party), or 2. The law provides the injured party with a direct lawsuit against the insurer. The injured party (the beneficiary) may bring a direct claim against the insurer for compensation, bypassing the insured’s financial position. CLASSIFICATION Key Characteristics of Liability Insurance 3. Unlimited Coverage: Unlike property insurance, liability insurance does not typically specify a fixed compensation amount in advance. This is because the extent of the insured's liability and the resulting financial impact are unknown until the liability arises. CLASSIFICATION Second: Personal Insurance(Insurance of Persons) (‫التأمين على‬ ‫)االشخاص‬ Personal insurance pertains to the insured individual. Under this type of insurance, the insurer is obligated to pay the insurance amount upon the occurrence of the insured risk as stipulated in the contract, regardless of whether the occurrence results in actual harm to the insured. The insured person is the focal point of consideration, as this type of insurance aims to cover risks that affect the individual, including their body, health, or life. CLASSIFICATION Key Characteristics of Personal Insurance: 1.Non-Indemnity Nature: Personal insurance does not carry any indemnity character. The insured is entitled to the insurance amount even if they suffer no harm when the risk occurs. 2.Subject Matter: The subject of personal insurance is the individual insured, specifically the risks threatening their life, physical integrity, health, or work capacity. When the insured risk materializes, the insured or the designated beneficiary receives the agreed-upon insurance amount stipulated in the contract. CLASSIFICATION Insurance of Persons(‫)التأمين على االشخاص‬, Types: 1.Life Insurance 2. Non-Life Insurance for Individuals CLASSIFICATION 1-Life Insurance: Life insurance addresses the risk of death, which is an inevitable threat to every individual. According to the rulings of the Dubai Court of Cassation: Unlike other types of insurance, where the insured must notify the insurer of any changes that may increase the insured risk during the policy term, the insured under a life insurance policy is not obligated to do so. However, when entering into or renewing a life insurance contract, the insurer has the right to adopt new measures, such as: 1- Requiring the insured to undergo a medical examination. 2- Mandating the submission of health-related information and declarations. These measures enable the insurer to assess the insured risk and determine the compensation amount accordingly. CLASSIFICATION 1-Life Insurance: 1-Insurance for Survival This type of insurance obligates the insurer to pay a sum of money to the insured if they survive until the specified term, meaning if the insured remains alive until the agreed-upon time. For instance, a person may enter into a life insurance contract to receive the insurance amount upon reaching the age of sixty. If the insured reaches that age, they will receive the insurance amount to help meet their life needs after this age, when their health might deteriorate, making it difficult for them to earn a living. CLASSIFICATION 1-Life Insurance: 1- Mixed Insurance This is insurance that covers both life and death contingencies. For example, an individual may enter into a life insurance contract for a 40-year term, with the insurance amount payable if the insured is alive at the end of the term. If the insured dies before the term expires, the amount is paid to the designated beneficiary. Mixed insurance obligates the insurer, in return for premiums, to pay the insurance amount either to the beneficiary if the insured dies during the specified term, or to the insured themselves (or the beneficiary) if the insured survives the term CLASSIFICATION 1-Life Insurance: Ruling of Dubai Court of Cassation The Dubai Court of Cassation has held that, under Articles 1032 and 1033 of the Civil Transactions Law, the subject matter of a life insurance contract is the risk related to the life of a person It is essential for the insurer to assess the risk they are insuring against, and they must scrutinize the insured’s situation, particularly from a medical perspective. The insurer may employ several methods for this, including asking the insured specific questions about their health. If the insured acts in bad faith by concealing or providing false information about their health when entering the contract, leading to a miscalculation of the risk, and if the insured risk materializes due to the false statement, this constitutes fraud The burden of proof lies with the insurer to demonstrate the insured's bad faith in concealing their health condition, especially if they knew about the illness and that it led to the occurrence of the insured risk—their death. CLASSIFICATION 1-Life Insurance: Article (1033) The assured shall be obliged as follows: (a) to pay the sums agreed at the time stipulated in the contract; (b) to declare, at the time the contract is made, all information knowledge of which is of concern to the insurer to estimate the risk which he is assuming; (c) to notify the insurer of any matters occurring during the period of the contract which lead to such risks being increased. Article (1033) 1- If the assured acting in bad faith conceals any matter or provides incorrect information such as to lessen the degree of the risk insured against, or to vary the subject matter thereof, or if he fraudulently fails to discharge any obligation he has undertaken, the insurer may require that the contract be cancelled, and he shall be entitled to keep any instalments which fell due prior to such requirement. 2- If fraud or bad faith is disproved, then the insurer must, when he requires that the contract be cancelled, return to the assured the premiums he has paid, or return such part thereof in respect of which the insurer was not on risk. CLASSIFICATION Non-Life Insurance for Individuals, Types: 1- Insurance Against Physical Injuries This insurance obligates the insurer, in exchange for the payment of premiums, to pay the insured the agreed insurance amount in the event of a physical injury. It also covers the costs of medical treatment and medication The primary obligation of the insurer in this type of insurance is to cover the injury, meaning the risk that impacts the person's body. The obligation to pay medical expenses is considered a secondary or incidental obligation CLASSIFICATION Non-Life Insurance for Individuals, Types: 2. Insurance Against Illness This type of insurance covers disability that the insured may suffer as a result of illness. It also includes the medical expenses incurred by the person due to the illness. DIVISION OF INSURANCE INTO PROPERTY INSURANCE AND PERSONAL INSURANCE(IMPORTANCE) 1- Occurrence of Damage In property insurance, which is characterized by its compensatory nature, the insured must suffer damage as a result of the insured risk for coverage to be payable. If no damage occurs, the insurer is not obligated to provide coverage. Article 1034 of the UAE Civil Transactions Law, which states: "The insurer must provide the indemnity or the amount due to the insured or beneficiary in the agreed- upon manner upon the occurrence of the insured risk or upon the maturity of the term specified in the contract." DIVISION OF INSURANCE INTO PROPERTY INSURANCE AND PERSONAL INSURANCE(IMPORTANCE) 1- Occurrence of Damage In personal insurance, the occurrence of damage is not a necessary condition for the insured or beneficiary to be entitled to the insured amount, as it lacks a compensatory nature. The insurer is obligated to pay the agreed amount upon the occurrence of the insured event without the need to prove specific damage Article 1046 of the UAE Civil Transactions Law, which provides: "The insurer is obligated in life insurance to pay the agreed amounts to the insured or beneficiary upon the occurrence of the insured event or upon the maturity of the term specified in the contract, without the need to prove any damage sustained by the insured or beneficiary." DIVISION OF INSURANCE INTO PROPERTY INSURANCE AND PERSONAL INSURANCE(IMPORTANCE) 2- Proportionality Between Compensation and Damage In property insurance, proportionality is required between the amount of compensation the insurer is obligated to pay and the extent of the damage incurred by the insured as a result of the insured risk materializing Upon the occurrence of the insured risk, the insurer is only liable to pay an amount that corresponds to the actual damage, even if the agreed insured amount in the insurance contract (policy) exceeds the value of the damage. The insured is entitled only to compensation equal to the actual damage, even if multiple insurance policies are in place with several insurers. The insured cannot claim compensation exceeding the damage incurred, regardless of the number of insurance contracts DIVISION OF INSURANCE INTO PROPERTY INSURANCE AND PERSONAL INSURANCE(IMPORTANCE) 2- Proportionality Between Compensation and Damage Article 1043 of the UAE Civil Transactions Law, which provides: "If a property or interest is insured with multiple insurers for amounts exceeding the value of the insured property or interest, each insurer is obligated to pay a portion proportional to the ratio between the insured amount and the total value of all insurance contracts combined, provided that the total amount paid to the insured does not exceed the value of the damage incurred." DIVISION OF INSURANCE INTO PROPERTY INSURANCE AND PERSONAL INSURANCE(IMPORTANCE) 3- Combining Insurance Proceeds and Compensation This occurs when the realization of the insured risk also triggers the liability of a third party to provide compensation, alongside the insurer’s obligation to pay the insured sum For example, if a person insures their house against fire and the house catches fire due to sparks from a neighbor's stove, the insurer's obligation to pay the insured sum arises alongside the neighbor’s liability for the damages caused by the fire. The insured is prohibited from combining the receipt of the insurance payout from the insurer with the compensation obtained from the party responsible for the harmful act that led to the realization of the insured risk. DIVISION OF INSURANCE INTO PROPERTY INSURANCE AND PERSONAL INSURANCE(IMPORTANCE) 3- Insurance on Persons: Combining Insurance Proceeds and Compensation The insured or the beneficiary is allowed to combine the insurance payout and compensation For instance, if a person insures their life for the benefit of their dependents and then dies as a result of an accident caused by the wrongful act of a third party, the dependents are entitled to receive both the insurance payout from the insurer and compensation from the party responsible for the wrongful act. DIVISION OF INSURANCE INTO PROPERTY INSURANCE AND PERSONAL INSURANCE(IMPORTANCE) 3- Insurance on Persons: Combining Insurance Proceeds and Compensation Article 1053 of the UAE Civil Transactions Law, which states: "If the insurer pays the insured amount in life insurance, the insurer does not have the right to subrogate the insured or the beneficiary in their claims against the party responsible for the insured event or the liable party."