Disputes over insurance contract and notes on resolving disputes at Court

The insurance business is an activity of an insurer for profit purposes, whereby the insurer takes the risk of the insured person on the basis that the policyholder paying insurance premium for the insurer to pay the insurance to the beneficiary or the indemnity to the insured person upon the occurrence of the insured event.

After reaching an agreement, the policyholder and the insurer will conclude an insurance contract to bind their rights and obligations together in the insurance relationship. However, the insurer and policyholder could face several risks related to the occurrence of insurance contract disputes. In reality, the commonly known insurance contract disputes include disputes over the insured event; dispute over the insurance coverage; disputes over validity of insurance contracts, etc.

1. What is insurance contract?

According to Article 12.1 of the Law on Insurance Business 2000, an insurance contract is an agreement between the policyholder and an insurer, whereby the policyholder shall have to contribute insurance premiums and the insurer shall have to pay the insurance to the beneficiary or the indemnity to the insured person upon the occurrence of the insured event.

However, according to Article 4.16 of the Law on Insurance business 2022 (effective as of 01 January 2023), an insurance contract is an agreement between the policyholder and the insurer or a branch of foreign non-life insurer or a mutual micro-insurance organisation, whereby the insurance buyers are bound to pay insurance premiums; the insurer, the branch of foreign non-life insurer or the mutual micro-insurance organization   is bound to pay indemnity or insurance under the contractual terms and conditions.

2. Notes on settling insurance contract disputes at Court

When a dispute between the insurer and the policyholder happens, dispute resolution through negotiation would be the priority. However, in case the dispute cannot be resolved through negotiation, it will be brought to a competent Court. Therefore, when resolving disputes over insurance contract at Court, the involved parties should note the following points:

• Firstly, regarding the party in the case of dispute over the insurance contracts:

In addition to the conditions on civil procedure legal capacity and civil procedure act capacity of the party, the civil procedure law also stipulates party is the agency, organisation whose duly representatives participate in the proceedings. Therefore, the branch of an insurer cannot be the party in the case because it is not legal entity.

• Secondly, regarding the statute of limitations for filing a lawsuits

Under Article 30 of Law on Insurance Business 2000, the statute of limitations for instituting a lawsuit about an insurance contract shall be three years from the time the dispute arises. However, as of 01 January 2023, Law on Insurance Business 2022 comes into effect and will no longer states such statute of limitation. Instead, the statute of limitation regarding the insurance contract shall be three years as of the date on which the person with the right to make the request knew or should have known that his/her lawful rights and interests were infringed under Article 429 of the Civil Code 2015.

However, a particular note regarding the maritime insurance contract is that the statute of limitation for filing a lawsuit is two years as of the date of occurrence of dispute under Article 336 of Maritime Code.

• Thirdly, regarding the determination of the insured event

Determining the insured event is extremely important the disputing should pay attention as this is the basis for determining insurance liability of the insurer. According to Article 3.10 of Law on Insurance Business 2000, insured events mean objective events mutually agreed upon by the parties or prescribed by law in which the occurrence of such events leads to insurer shall have to pay the insurance to the beneficiaries or pay indemnities to the insured persons.

Therefore, the arising of the insured event will be the ground for the insured person or the beneficiary to claim the insurance or indemnity from the insurer. However, parties can agree on the exclusion of insurance liability in the insurance contract, which stipulates that the insurer does not have to indemnify or pay the insurance when the insured event occurs. In addition, Article 39 of Law on Insurance Business 2000 also stipulates cases where the insure shall not pay the insurance, specifically as follows:

• The insured person dies of suicide within two years, from the date of payment of the first premium or from the date the insurance contract continues to be effective;
• The insured person dies or is permanently disabled due to the intentional fault of the policyholder or the beneficiary;
• The insured person dies due to the execution of death sentence.

Fourth, when preparing the lawsuit file

When drafting a petition, the petition must not only ensure sufficient information according to the prescribed form but also clarify the specific claim of the plaintiff and the grounds to prove that such claim is reasonable and lawful (both on the legal grounds and on the consistent of the objective facts of the relationship between the disputing parties).

Claims could refer to any obligor in the insurance contract relationship; therefore, the petition must also clearly provide the defendant’s information and define the status of persons with related benefits and obligations (if any). Attached to the petition are documents proving that the plaintiff’s lawsuit claim is lawful and justified.

Above is an overview of disputes over insurance contract and notes on resolving disputes at Court. If you have difficulty in finding a Law Firm to advise and support in legal aspects related to the litigation at the Court, please contact us.

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