Insurance law deals with insurance policies and claims, and how these policies are formed and enforced. An insurance contract involves two parties, the first party being the insured (the policyholder) and the second party being the insurer (the insurance company). In this contract, the policyholder aims to transfer the risk of any unforeseen losses to the insurance company in exchange for a regular fee called a premium. Once the event that is specified in the contract has incurred a loss to the policyholder, the insurance company assumes it and compensates the policyholder with a specified sum of money. An insurance policy may include third party liability coverage to cover any costs when the event that has occurred has lead to a physical injury or any damage to someone else or their property.
Insurance companies rely on lawyers to help them understand and implement the insurance laws of the country. In addition, insurance companies also employ lawyers to defend the policyholder in case a third party makes a claim against them. If the policyholder is found liable for damages experienced by the third party, the insurance company will cover the cost, as stated in the insurance policy.
Lawyers may also be employed by the policyholder in the case of bad faith insurance practices from the insurance company’s side. Bad faith practices include:
- Refusal to pay a policyholder’s valid claim;
- Neglecting to carry out the necessary investigation in order to respond to the claim;
- Unreasonable delay in accepting or denying the claims made by the policyholder;
- Settling claims for less than what was agreed upon;
- Requesting additional, unnecessary paperwork that was not mentioned in the policy;
- Misleading the policyholder with false information;
- Failure to defend the policyholder against a third party’s claim.
In the UAE, the Insurance Authority (IA) has established the Federal Law No. 6 of 2007 on Establishment of the Insurance Authority & Organization of its Operations. This law governs all licensed insurance companies in the UAE. Insurance companies are also instructed to operate according to the IA’s Authority Board Resolution No. 3 of 2010, which is a Code of Conduct for insurance companies in the UAE.
The law recommends settling any disputes amicably or through the Emirates Insurance Association (EIA) before seeking legal action.
It is a contract between the insurance company and the policyholder that aims to provide financial protection to any dependents (beneficiaries) after the death of the policyholder. The named beneficiaries are entitled to a specified sum of money (death benefit) from the insurance company in exchange for a premium that is paid by the policyholder.
After the death of the policyholder, life insurance claims can be sought after by more than one party, creating a large beneficiary dispute. The life insurance company will divert this dispute to the court to decide who the true beneficiary is. This is known as an interpleader action. The sum of money to be paid to the beneficiary will be put into an account that is controlled by the court. The case is resolved either by litigation or by settlement.
The most common reasons for a beneficiary dispute are the following:
- If the policyholder has not changed the listed beneficiaries after divorcing and re-marrying, the surviving spouse will not receive any proceeds, creating a dispute with the ex-spouse;
- If the policyholder was not mentally competent in the days leading up to their death, an external party may coerce the vulnerable policyholder to make changes to the list of beneficiaries. Such changes may be challenged by the original beneficiaries;
- No beneficiary was assigned;
- The policyholder has assigned 100% of the proceeds to more than one beneficiary
- The policyholder’s attempt to change the beneficiary was not properly executed. In this case, the policyholder changed the beneficiary but the life insurance company does not have a record of the change;
- A beneficiary found liable for offenses or abuse against the policyholder, that may have lead to their death, will not receive any of the proceeds.
It is a contract of indemnity that covers any risk other than the risk of death. They can be categorized as follows:
- Health insurance
- Motor insurance
- Home insurance
- Fire insurance
- Travel insurance
- Commercial Insurance
- Marine insurance
Insurance companies can refuse policy claims for the following reasons:
- The fine print in an insurance contract usually includes a list of specific circumstances that are not covered by the insurance policy. These are often overlooked by the policyholder. For example, there will be no beneficiary payout from a life insurance policy if the policyholder’s death is due to suicide, a drug overdose, drunk driving or war;
- Usually, if the policy has not been renewed, has been canceled or the premium has not been paid, the insurance company will refuse the claim;
- The policyholder has withheld relevant information that might affect the policy payout when taking out or renewing an insurance policy. For example, failure to disclose pre-existing medical conditions when applying for health insurance may warrant a refusal of any claim from the insurance company;
- Not taking any precautions to prevent the claims from arising. For example, if you are caught in a car accident but it is found that your car was not suitable for the road prior to the accident, it is very likely that the car insurance claim will be rejected;
- You have exaggerated the claim and are trying to claim for more than you should;
- Not disclosing any other insurance policies while applying for a new insurance policy.
When does the right to make an insurance claim default?
Under the UAE Insurance law (that is, not the Dubai International Financial Centre (DIFC)), the policyholder can make a claim any time within three years from the date of loss, or else the right to claim for any losses will be waived. For marine insurance claims, the time limit is two years, according to the Federal Commercial Maritime Law No. 26 of 1981.
In the DIFC, there isn’t a specified insurance claim time limit, therefore the general contract time limit applies, being six years from the date of loss.
A closer look at civil case 295/2016 gives us some insight into the UAE court’s strict adaptation of the three year time limit in claiming the insurance rights. In this case, two insurance companies entered a mutual contract. The defendant owed the plaintiff 15% of damages caused to a shop due to a fire, in addition to long overdue damages caused to motor vehicles. Since it has taken longer than three years for the car insurance to be claimed, the claim was defaulted. As for the damages to the shop, both insurance companies attempted to settle this dispute. However, due to the active attempt from both parties to reach a settlement, the right to claim has not been waived or mitigated, despite it taking more than three years. Since no settlement was reached, the case was transferred to court.
Our competent lawyers are equipped to handle any and all insurance disputes you may have.
Our lawyers will work alongside insurance companies to decide whether or not they are liable for damages for claims made by the policyholders. Evidence will be collected from a range of sources in order to build a clear picture of what has happened and advise the insurance company accordingly. We will also negotiate and draft insurance policies and contracts, and recommend changes in the wording of the policies to conform with the law or to protect insurance companies against invalid claims. We will also investigate damages for late payments, or for third party claims.
Within an insurance company, we can also handle reinsurance disputes (when the insurance company buys insurance to minimize the loss).
In the case of the insured parties, we work on behalf of the policyholder in an insurance claim dispute.
What makes us the right choice?
Our talented lawyers possess a real investigative nature that aids in piecing together the events and understanding what really occurred in the claims. Furthermore, our strong communication skills and adaptability is key in dealing with people from all backgrounds and professions.
We have a real edge when it comes to dealing with complex and sensitive situations, while still remaining just and reasonable. In addition to all this, our in-depth understanding of contract law will surely help you in drafting insurance policies and contracts, as well as in discovering any breaches in the contract. Moreover, our knowledge in finance and financial risk comes in handy when handling commercial insurance cases.