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Claims

General

What general rules, requirements and procedures govern the filing of insurance claims?

The procedures for filing insurance claims are set out in the conditions of the contract, usually in a specific chapter of the insurance contract.

Notice of a claim is usually given by means of a formal communication sent by the insured, who will provide the insurer with documents proving the claim, its consequences and damages in order to allow the loss adjustment to take place. This will be done by observing, in particular, the duties of good faith and cooperation between the parties.

Time bar

What is the time bar for filing claims?

Overall, the time bar for filing claims is one year, as provided by Article 206(1) of the Civil Code (Law 10,406/02).

Denial of claim

On what grounds can the (re)insurer deny coverage?

As a rule, indemnity can be denied by the insurer based on:

  • non-payment of the premium;
  • risks expressly excluded from coverage; or
  • when the insured fails to comply with its contractual obligations or aggravates the risk subscribed by the insurer.

In reinsurance relationships, coverage is essentially denied in case of:

  • no express contractual provision for the risk covered;
  • no specific contractual clause; or
  • non-compliance with conditions imposed by the contract.

What rules and procedures govern the insured’s challenge of the denial of a claim?

In the administrative sphere, the insured can file a reconsideration request directly with the insurer. Nevertheless, the National Council of Private Insurance requires that every insurer establish an ombudsman's office, which may be used by the insured through agile and effective means (eg, email, telephone), and which will serve as a channel of communication between the parties in mediation and conflict resolution. The insured can also use the consumer protection bodies and the Superintendence of Private Insurance (SUSEP) if it wishes to contest the denial of a claim. If these fail, or if the insured prefers not to request reconsideration, the insured may file suit.

The right to sue is guaranteed to the insured by Article 5(XXXV) of the Federal Constitution, which provides that any threats or damages to rights will be considered by the judiciary.

Third-party actions

On what grounds can a third party file a claim directly with the (re)insurer?

Usually, where the insured is notably guilty, a third party can file a claim directly with the insurer under liability insurance. This situation is set out in SUSEP Circular 437/12, even in case of death coverage in life insurance, when the beneficiary claims the insured amount.

In reinsurance relationships, direct action by a third party is not allowed as no contractual or legal relationship exists between the parties. Complementary Law 126/07 also prohibits direct action.

However, as an exception, a reinsurer may pay an indemnity directly to an insured in case of insolvency, liquidation order or bankruptcy of the insurer, as set out in Article 14(1) of Complementary Law 126/07 – this is referred in reinsurance contracts as the ‘cut through clause’.

Punitive damages

Are punitive damages insurable?

Based on the strict definition of ‘punitive damages’, such damages are not covered under Brazilian law. However, moral damages are usually an excluded risk, with the possibility of contracting specific coverage for this type of damage.

Subrogation

What regime governs (re)insurers’ subrogation rights?

The right of subrogation of (re)insurers is provided by the Civil Code (Law 10,406/02). Some insurance modalities also provide for alternative loss recovery methods (eg, performance bonds).

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