Classification of Personal Insurance - PDF

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 contrac...

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."