An insurance contract is one under which the insurer undertakes to pay the policyholder a sum of money or indemnity upon the occurrence of the insured risk in return for premiums paid by the policyholder. The Kuwaiti Civil Code regulates insurance contracts.
Aleatory contract: the insurer's obligation depends on the occurrence of the risk — if it does not materialise, nothing is paid despite premiums being collected.
Contents
1) The Concept of Insurance
- Definition: a contract under which the insurer undertakes to indemnify the policyholder for loss arising from the occurrence of a specified risk — in return for premiums.
- Consensual: formed by offer and acceptance — but typically evidenced in writing (the policy).
- Continuing contract: extends over a period of time — with periodic premiums.
- Contract of adhesion: the insurer typically pre-sets the terms — the policyholder accepts or rejects them.
Civil Code: regulates insurance contracts in Articles 773 to 824 — supplemented by the Commercial Companies Law as regards insurance companies.
2) Types of Insurance
Property and liability
- Property insurance: against fire, theft, and natural disasters.
- Liability insurance: against the policyholder's liability to third parties.
- Motor insurance: mandatory third-party — optional comprehensive.
- Marine insurance: covering ships and goods transported by sea.
Personal insurance
- Life insurance: a sum payable on death or survival.
- Health insurance: covering medical and treatment expenses.
- Accident insurance: indemnity for personal accidents.
- Disability insurance: indemnity for inability to work.
3) Elements of the Contract
- Consent: consent of both parties — free from mistake and fraud.
- Subject matter: the insured risk — must be contingent and not contrary to public order.
- Premium: the financial consideration paid by the policyholder — calculated based on risk level.
- Sum insured: the amount the insurer undertakes to pay upon occurrence of the risk.
- Insurable interest: the policyholder must have an interest in the non-occurrence of the risk.
4) Insurer's Obligations
- Issuing the policy: delivering a policy containing all terms and conditions.
- Covering the risk: bearing the insured risk throughout the contract period.
- Paying indemnity: paying the insured sum or compensation upon occurrence of the risk — within a reasonable time.
- Good faith: ambiguous terms are interpreted in favour of the policyholder (contract of adhesion).
Subrogation: after paying indemnity, the insurer is subrogated to the policyholder's rights against the third party responsible for the loss.
5) Policyholder's Obligations
- Disclosure: disclosing all material information at inception — accurately and truthfully.
- Paying premiums: paying insurance premiums when due.
- Notifying the risk: notifying the insurer immediately upon occurrence of the insured risk.
- Mitigating loss: exercising reasonable care to prevent the loss from worsening.
- Change in risk: informing the insurer of any circumstance that increases the risk during the contract.
Concealment and fraud: if the policyholder conceals material information or makes false statements, the contract may be voided. See contracts and obligations.
6) Indemnity and Claims Settlement
- Indemnity principle: compensation equals the actual loss — it does not exceed the value of the insured interest.
- Double insurance: if the policyholder insures with multiple companies, they cannot recover more than the actual loss.
- Claims process: filing a report — providing documents — expert inspection — settlement decision.
- Timeframe: claims must be settled within a reasonable time — unjustified delay creates liability.
7) Denial of Claims
Legitimate grounds for denial
- Policyholder deliberately caused the loss.
- Concealment of material information or false statements.
- Non-payment of premiums despite notice.
- The risk falls outside the scope of cover.
Your rights upon denial
- Request the company's written reasons for denial.
- File a complaint with the Central Bank of Kuwait's Consumer Protection Unit.
- Sue for compensation in court.
- Limitation: three years from the date you became aware of the risk's occurrence.
8) Practical Guidance
Before insuring
- Read the entire policy — especially exclusions and special conditions.
- Disclose all requested information truthfully.
- Compare offers from different insurance companies.
- Ensure the sum insured matches the value at risk.
When filing a claim
- Notify the company immediately after the incident.
- Document the damage with photos and reports.
- Keep copies of all correspondence.
- Consult a lawyer if your claim is denied.
Need help with an insurance dispute or a denied claim? Contact Attorney Meshari Obaid Al-Enezi — Yumnaak Law Firm.
