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What general rules, requirements and procedures govern the filing of insurance claims?
The terms of the insurance contract will govern the filing of claims with an insurer. Notification requirements differ depending on whether the policy in question is claims-made or losses occurring. In claims-made policies, the requirement will typically be to notify the insurer of a claim or circumstance which may give rise to a claim, as soon as possible or within a stipulated time after the insured becomes aware of it. Typically, notification must be in writing and copies of the relevant documents must be provided, along with details of the claim/circumstance.
The Consumer Protection Code 2012 also sets out claims processing requirements which apply to insurers, including a requirement to have in place a written procedure for the effective and proper handling of claims and to ensure any claim settlement offer made is fair. If a claim is declined, insurers must provide the claimant with the reason for the decision and written details of any internal appeals mechanisms available. The code also sets out requirements which apply to insurance intermediaries who assist a policyholder in making a claim.
What is the time bar for filing claims?
The terms of the contract, in particular the notification requirements, will set out the requirements for filing of a claim with an insurer.
The Statute of Limitations Act 1957 governs limitation periods. If the action is for breach of contract, then it must be brought within six years from the date on which the cause of action accrued. The time limit for a consumer to make a complaint to the Office of the Financial Services and Pensions Ombudsman is six years. The Financial Services and Ombudsman Act 2017 extends the limitation period for consumer complaints in respect of long-term financial services.
Denial of claim
On what grounds can the (re)insurer deny coverage?
Insurers will not provide cover if the claim does not fall within the insuring clause of the policy or is specifically excluded.
Insurers can repudiate if there has been a breach of a warranty or basis of contract clause. Warranties are strictly construed by the Irish courts as breach entitles insurers to repudiate liability even if the breach is not material to the loss or the warranty is not material to the risk.
Insurers can decline a claim, without any requirement to show prejudice, if there has been a breach of a condition precedent. The remedy for breach of a bare condition is in damages.
Insurers can also avoid the policy for material non-disclosure and/or misrepresentation or if an insured makes a fraudulent claim.
What rules and procedures govern the insured’s challenge of the denial of a claim?
The rules and procedures governing the insured’s challenge of the denial of a claim depend on the forum in which they choose to challenge it.
The insured should first look at the complaints handling and dispute resolution provisions of the insurance contract.
If the contract contains an arbitration clause, the dispute must be referred to arbitration (the Arbitration Act 2010 applies to all Irish arbitrations). A consumer is not bound by an arbitration clause where the agreement has not been individually negotiated and the dispute involves a claim for an amount not exceeding €5,000.
Action for breach of contract are available to the insured (subject to the terms of the contract). Where the insurer has failed to pay a valid claim, the insured would have an action for damages. Claims are brought through the Irish courts and are subject to the Rules of the Superior Courts, Circuit Court Rules or District Court Rules (depending on the jurisdiction). If damages are inappropriate, the court may grant specific performance (this is a discretionary remedy).
Limitation periods for all forums should be adhered to.
On what grounds can a third party file a claim directly with the (re)insurer?
A third party generally has no rights at common law against the insurer. Such a person is caught by the privity of contract rule which means that only the parties to the contract have enforceable rights and obligations under the contract.
There are certain exceptions to the privity of contract rule, for example, Section 76(1) of the Road Traffic Act 1961, which affords a person claiming against an insured motorist certain remedies against the insurer.
The Irish government has proposed draft legislation in the form of the Consumer Insurance Contracts Bill 2017 which, among other things, provides for third parties intended to benefit under an insurance contract to be permitted to make a direct claim against insurers in certain circumstances.
Are punitive damages insurable?
Insurers can choose to cover or exclude punitive damages. Whether an insurer will be exposed to claims in respect of punitive damages depends on the terms and conditions of the insurance contract. From an insurer’s perspective, the contract would ideally exclude the payment of punitive or exemplary damages. Punitive damages are likely to involve some manner of wilful deceit or neglect on the part of the insured, and this is likely to be exempted from cover.
What regime governs (re)insurers’ subrogation rights?
Once the insured has been fully indemnified by the insurer in respect of an insured loss, the insurer is entitled to issue proceedings (in the insured’s name) against the person(s) responsible for the loss which gave rise to the insurer’s obligations under the insurance contract.
Certain conditions must be satisfied before an insurer may exercise rights of subrogation, namely that, the insurance is an indemnity insurance, the insurer has made payment under that contract and there is a connection between the subject matter of the insurance and the rights of the insured to which the insurer are subrogated. These rights can originate under contract, tort or statute.
Insurers can modify these rights by incorporating into the policy conditions which enable insurers to take over the right before they indemnify an insured or which exclude the insurers’ rights of subrogation.
In certain circumstances an insurer may agree to waive its subrogation rights at the request of an insured.
Some insurance contracts will not have a condition entitled ‘subrogation’ but will have a condition giving insurers’ control of claims and the right to prosecute any claims at their own cost.
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