Definition of the insurance contract
The insurance contract is the basis of the relationship between an insurance company, a mutual insurance company or a provident institution, and an insured. It represents a legal obligation:
- For the insurer of guarantee the consequences of a random or disaster event.
- For the insured of pay a premium in exchange for this guarantee.
The insurance contract has several qualities determining the commitments between the insured and the insurer:
- Consensual : the insured and the insurer agree on the terms of the contract and their execution.
- By membership and for a fee : the insured signs a contract written by the insurerand pays a premium for performance of the contract.
- Random : the performance of the guaranteed services results from random, unforeseen events. It is therefore possible that these services will never be performed if the insured never calls his insurer. They will also not be executed in the event of a voluntary event on the part of the insured.
- Synallagmatic : this term means the reciprocity of obligations between the insurer who must indemnify the insured, and the insured who must pay premiums.
- In good faith “, or confidence: the insurer is not obliged to verify the declarations of the insured during the subscription, because the insured is always considered to be in “good faith”. It is the insurer who is required to prove the bad faith of the insured in the event of a dispute.
Namely: the main rules of the insurance contract are defined in Book I of the Insurance Code.
Constituent documents of the insurance contract
An insurance contract is materialized by two types of documents:
- The terms and conditionswhich bring together all the common conditions applicable to all policyholders subscribing to the same type of contract: guarantees, exclusions, forfeitures, procedures for termination, declaration and compensation of claims, etc.
- The special conditionsunique for each insured, and adapting the contract to the needs and declarations of the insured: identification of the subscriber, persons and property insured, amount of premiums and deductibles, start date of cover, etc.
These documents are generally preceded by other documents more or less binding on the insured and the insurer:
- The information sheetprovided by the insurer and mandatory for several years, containing various useful information for the insured (see below).
- The proposal, real pre-contract bringing together the elements provided by the insured and the conditions of the insurer. It is usually signed by both parties but does not constitute a commitment between them. On the other hand, if the contract is subsequently taken out, it can be received as proof in the event of a dispute between the insurer and the insured on the risks declared by the insured, for example.
- The cover note provided with the temporary insurance certificate (as part of the purchase of a second-hand vehicle).
Since 2018, and to comply with European Directive 2016/97 on insurance distribution, a new mandatory document ” insurance product information » is issued by insurers and insurance intermediaries before taking out a new non-life contract => See our article on the information document on the insurance product.
Obligations of the insurer and the insured
Signing an insurance contract represents for the insurer and the insured an important act, inducing obligations defined by the Insurance Code.
The obligations of the insurer
When signing the contract:
- The delivery of an information noticeas described in our article on the insurance quote, and including:
- the rates and deductibles of the various guarantees (civil liability, damage, assistance, etc.) in damage insurance, as well as various information on the insurer and the procedures to be followed;
- the statutes and regulations in health and provident insurance.
Note that this information sheet is not mandatory in the case of term insurance.
- The drafting of the contract in writing, in French and in bold characterswith all the conditions required by law (see the general and specific conditions above).
During the execution of the contract:
- During a disaster: compensate the insured according to the rules determined in the conditions of the contractsubject to exclusions and legal or contractual forfeitures.
The obligations of the insured
When signing the contract:
- Answer exactly the questions asked by the insurerwith provision of the requested documents (although the principle of “good faith” of the insured does not require it), so that the latter can assess the risk and the amount of the premium.
If the answers provided prove to be inaccurate, there is a risk of nullity of the contract and therefore of the absence of reimbursement for the insured in the event of a claim. The insurer must however prove the inaccuracy of the declarations.
During the execution of the contract:
- Pay regularly the amount of the premium.
- Notify the insurer in the event of a claim within the time allowed.
- Notify the insurer of any change in his personal situation which may lead to a modification of the risk and therefore of the amount of the premium (moving, divorce, etc.).
Duration of the insurance contract
Defined at the time of subscription by mutual agreement between the insurer and the insured, the duration of the contract must be entered on the special conditions. for contracts of more than 3 years, in very visible characters above the signature.
Note: it is important to differentiate between “duration of the contract” and “duration of the guarantees”. Indeed, an insurance contract can be signed on a certain date and the guarantees only take effect a few days or a few weeks after this date, or even retroactively.
Tacit agreement
The tacit renewal of a fixed-term insurance contract consists of its automatic renewal on a date specified in the contract. It cannot concern contracts of a fixed duration of more than one year and must be indicated on the contract, with the notices concerning notice periods. It is very common in insurance contracts for individuals: auto, home, etc.
The principle of tacit renewal, quite restrictive for the policyholder/consumer, has been considerably relaxed with the implementation of the Châtel law and, more recently, the Hamon law.
Conclusion
An insurance contract is an agreement between two or more parties that sets out the terms and conditions for the provision of insurance. The agreement typically includes the definition of the risks insured against, the amount of insurance coverage that is provided, the conditions under which the insurance will be effective, and the period during which the insurance will remain in force. Insurance contracts can be written or oral, and can be for a period of time or for an indefinite period. Insurance contracts typically include a number of documents, including a policy document, an application form, and an indemnity agreement. Insurance contracts can be indefinite in duration, or they can be terminated by either party at any time.