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What general rules, requirements and procedures govern the filing of insurance claims?
The procedure for filing insurance claims is typically set out in the contract itself. (Re)insurance contracts contain notification clauses which set out the time within which the claim must be made and the manner in which it must to be brought.
The Schedule to Chapter 12 of the Insurance Rules (Best Practices by Undertakings concerned in Handling Complaints) sets out the guidelines on best practices for handling complaints by an authorised insurance undertaking and specific examples of the areas to be considered when handling complaints.
What is the time bar for filing claims?
The time limit within which an action may be instituted largely depends on the type of claim. If the action is for damages deriving from a breach of contract, the prescriptive period for filing a judicial claim is typically five years; whereas if the damages are in tort, the prescriptive period is typically two years. The aforementioned time periods may be suspended or interrupted in certain cases prescribed by law.
Denial of claim
On what grounds can the (re)insurer deny coverage?
Coverage may be denied on a number of grounds, including:
- failure to observe the notification requirements in the policy;
- exclusion of coverage;
- in the case of fraudulent claims; and
- in the case of non-disclosure or misrepresentation by the insured.
What rules and procedures govern the insured’s challenge of the denial of a claim?
If the claim of the insured is denied, he or she may choose to resort to the competent court or tribunal. The rules and procedures governing the manner in which an insured may challenge a claim depend on the forum before which the dispute is litigated.
On what grounds can a third party file a claim directly with the (re)insurer?
Maltese law upholds the doctrine of privity of contract and only where expressly provided in the law may a contract be enforceable in favour of or against, a person not a party thereto. One such instance is contained in the Motor Vehicles Insurance (Third-Party Risks) Ordinance (Chapter 104 of the Laws of Malta) where an injured party resident in Malta or a designated state (in the European Union or the European Economic Area) and entitled to compensation in respect of any loss or injury resulting from an accident caused by the use of a motor vehicle which is insured by an authorised insurer and normally based in Malta or the territory of a designated state has a direct right of action against the authorised insurer in Malta, if the accident occurred in Malta or a designated state or if the accident occurred in a third country whose foreign bureau forms part of the green card system.
On the basis of the doctrine of privity of contract, it is unlikely that a third party (who is not a party to the contract) would have the right to bring a direct action against a (re)insurer.
Are punitive damages insurable?
The Civil Code provides that damages consist of:
- the actual loss which the act directly causes to the injured party;
- the loss of actual wages or other earnings; and
- the loss of future earnings.
Damages are directed towards placing the victim in the state he or she was in before the harm was suffered and, on this basis, Maltese courts uphold the principle that compensation for damages ought not to be seen in a punitive light.
Accordingly, the (re)insurance of punitive damages may well be held to be invalid on grounds of public policy.
What regime governs (re)insurers’ subrogation rights?
Although an insurer has an automatic right of subrogation on payment of an indemnity (under the Civil Code), it is desirable and typical to have a specific clause in a contract of insurance providing for subrogation. Subsequent to the insured being compensated further to a claim brought to his or her insurer, the latter would seek recourse against the third party in the name of the insured. The cooperation of the insured may be requested in terms of the conditions of the policy of insurance.
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