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What general rules, requirements and procedures govern the filing of insurance claims?
Unless stated otherwise in the policy, an insured must immediately notify the insurer of the occurrence of the insured event. If the insured fails to do so, the insurer can reduce the indemnification to the extent that the loss could have been avoided if the insured had given timely notice.
The insured has a duty to cooperate with the insurer by providing information about the loss. Upon the insurer's request, the insured must produce all information available to him or her that will help the insurer to establish the circumstances under which the insured event occurred and the amount of damage. If the insured fails to comply, his or her claim under the policy does not become due; the policy may even provide that the insured forfeits coverage.
In reinsurance, the cedent has the right to business management, but the parties often agree on a claims cooperation clause that requires the sharing of information between the cedent and reinsurer. The clause may require the reinsurer's prior approval for any compromise or settlement.
What is the time bar for filing claims?
Claims based on a direct insurance contract are time barred two years from the date of the triggering event that establishes the obligation to indemnify.
The time bar is 10 years for claims based on reinsurance contracts.
Denial of claim
On what grounds can the (re)insurer deny coverage?
The insurer can terminate an insurance contract and deny coverage if the policyholder has failed to inform the insurer truthfully of a significant risk factor that he or she knew about when questioned in writing. Further, the insurer can deny coverage if the insured caused the insured event intentionally.
What rules and procedures govern the insured’s challenge of the denial of a claim?
If the insurer has been provided with all relevant information to establish the insured event and the amount of damage, the indemnification payment is due and payable within four weeks. The insured can bring an action for payment against the insurer. If the court finds that the insurer has denied the claim wrongfully, the insurer must settle the claim plus any damage caused by the delayed payment, as well as the insured's legal expenses.
On what grounds can a third party file a claim directly with the (re)insurer?
Unless such right is provided for in the insurance contract, a third party can file a claim directly with the insurer only if explicitly provided for by law. This is the case in some areas of mandatory liability insurance, including
- motor vehicles;
- dams; and
- power plants.
In reinsurance, entities that are not parties to a reinsurance contract usually cannot enforce any claims under the reinsurance contract. However, a cut-through provision in the reinsurance contract may allow a non-signatory to claim directly against the reinsurer.
Are punitive damages insurable?
While some punitive elements can be found in isolated areas of Swiss law (eg, in cases of unjustified termination of employment or licence fee avoidance), punitive damages as such are not available from the Swiss courts. As a result, the insurability of punitive damages has found little attention in Swiss case law and legal literature.
What regime governs (re)insurers’ subrogation rights?
Where an insured’s claim against a third party is in tort, the insurer subrogates by operation of law into the insured's rights against the third party to the extent that the insurer has indemnified the insured. The main claim for compensation plus all ancillary rights are passed on to the insurer. Because the subrogated insurer 'steps into the shoes' of its insured, the insurer's rights are not greater than those of the insured. As a result, the insurer is subject to the same objections and defences that the third party may have had against the insured.
Where the claim of the insured against a third party is based in contract rather than in tort, the insurer has a generic right of recourse based on the concept of recourse amongst parties that are jointly liable for a loss or damage. If two or more persons are liable for the same loss or damage based on different legal grounds, compensation must be provided:
- in the first instance, by the person who is liable in tort;
- in the second instance, by the person who is liable based on contract; and
- in the third instance, by the person who is liable only as a matter of law.
According to traditional Swiss case law, an insurer is entitled to take recourse against a party in breach of contract only if that party acted in wilful misconduct or gross negligence. This case law is based on the 1954 Supreme Court decision in La Neuchateloise v Gini. Recent judgments suggest that Gini does not apply within the remit of international conventions (such as the UN Convention on the International Sale of Goods, the Montreal Convention on International Carriage by Air and the CMR Convention on International Carriage of Goods by Road).
A recourse against a person who is liable only as a matter of law is impossible.
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