Insurance rules and contract terms
Insurance rules describe the insured risks, exclusions, the rights of the parties and the claims payment procedure. If the contract expressly refers to the rules and they are attached to it or set out in it, their provisions become binding on both the policyholder and the insurer.
What should be clear before you pay
- Object of insurance: which property interest is protected.
- Insured events: which events are recognised as grounds for payment.
- Exclusions: which causes and circumstances are not covered.
- Sum insured: the maximum extent of the insurer's liability.
- Deductible: the part of the loss that remains with the policyholder.
- Premium: the price, payment deadlines and the consequences of late payment.
- Territory and period: where and when the protection applies.
- Claims settlement: notification deadlines, documents, inspection and payment.
The rules and the contract are not the same thing
The contract records the individual terms of a particular client: the parties, object, term, sum, premium and chosen options. The rules describe the general model of the product. Where they differ, the contract, the rules and the mandatory provisions of legislation must all be analysed; an individual term cannot worsen the client's rights contrary to a mandatory provision of the law.
Provisions of the rules to which the contract does not refer and which were not provided in the prescribed manner should not become an unexpected ground for refusal. It is therefore important to keep proof that you received the document.
Voluntary and compulsory insurance
In voluntary insurance the parties choose the cover within the limits of the law, so the terms of different companies can differ markedly. In compulsory insurance the main requirements are set by legislation. Such services are provided only by insurance companies holding the relevant licence; the mandatory minimum terms cannot be arbitrarily replaced by the insurer's rules.
Keep four documents
The policy or contract, the insurance rules, proof of payment, and the application/questionnaire with the information you provided. It is this set that helps to prove what was agreed in the event of a dispute.
Archive source material
The detailed 2012 explanation is preserved in full below: definitions of the parties, forms of insurance, ways of concluding a contract and the typical structure of the rules. It should be read bearing in mind subsequent changes in legislation and electronic processing.
According to the Law of the Republic of Kazakhstan “On Insurance Activity”, insurance is a set of relations for the protection of the lawful property interests of an individual or legal entity upon the occurrence of an insured event or other event specified in the insurance contract, by means of an insurance payment made by the insurance organisation at the expense of its own assets.
Insurance activity is the activity of an insurance (reinsurance) organisation connected with concluding and performing insurance (reinsurance) contracts, carried out under a licence of the authorised body in accordance with the requirements of the legislation of the Republic of Kazakhstan, or without a licence in accordance with the legislative act of the Republic of Kazakhstan on mutual insurance.
The insurer is a person who carries out insurance and who is obliged, upon the occurrence of an insured event, to make an insurance payment to the policyholder or to another person in whose favour the contract has been concluded (the beneficiary), within the amount specified in the contract (the sum insured);
The policyholder is a person who has concluded an insurance contract with the insurer.
The insured is the person in respect of whom the insurance is carried out.
The beneficiary is the person who, under the insurance contract, is the recipient of the insurance payment.
It should be noted that insurance is carried out in both voluntary and compulsory forms.
Voluntary insurance is insurance carried out by virtue of the will of the parties, the types, terms and procedure of which are determined by agreement of the parties.
Compulsory insurance is insurance carried out by virtue of the requirements of legislative acts, the terms of which are determined by agreement of the parties unless otherwise established by the legislative acts governing compulsory types of insurance.
Insurance rules are a document of an insurance organisation that defines the terms for carrying out insurance in a particular class of insurance.
An insurance contract is concluded in writing by:
1) the parties drawing up an insurance contract;
2) the policyholder's accession to standard terms (insurance rules) developed unilaterally by the insurer (a contract of adhesion).
The form of the written contract is determined by the insurer or by agreement of the parties. Failure to observe the written form of an insurance contract renders it invalid.
An insurance organisation has the right to conclude insurance contracts in the form of a contract of adhesion, issuing an insurance policy to the policyholder, only after the insurance rules have been agreed with the authorised body.
Where an insurance organisation concludes with a client a contract-agreement for a particular insurance product, the insurance rules developed for it are not subject to agreement with the authorised body.
Compulsory types of insurance are carried out on the basis of a contract concluded between the policyholder and the insurer by the insurer issuing an insurance policy to the policyholder, with the exception of compulsory insurance in crop production, which is carried out on the basis of a standard form of contract developed by the Government of the Republic of Kazakhstan.
At the same time, the rules for all compulsory types of insurance are subject to agreement with the authorised body.
What must the insurance rules contain?
In accordance with the civil legislation of the Republic of Kazakhstan:
1) a list of the objects of insurance;
2) the procedure for determining sums insured;
3) a list of insured events;
4) exclusions from insured events and limitations of insurance;
5) the term and territory of the insurance contract;
6) the procedure for concluding the insurance contract;
7) the rights and obligations of the parties;
8) the actions of the policyholder upon the occurrence of an insured event;
9) a list of documents confirming the occurrence of the insured event and the amount of losses;
10) the procedure and conditions for making insurance payments;
11) the time limit for deciding on an insurance payment or a refusal to pay;
12) the conditions for termination of the insurance contract;
13) the procedure for resolving disputes;
14) additional terms.
In addition, consumers of insurance services need to know that, in order to prevent violations of their rights and interests, the authorised body recommends that insurance organisations, when developing insurance rules, include in them the following additional terms:
1) the procedure for payment of insurance premiums;
2) immediate registration by the insurer of a notice of an insured event;
3) the ways in which the policyholder notifies the insurer of the occurrence of an insured event;
4) an obligation to issue the policyholder with a certificate listing the documents accepted by the insurer in respect of the insured event, with the date of their acceptance;
5) that the insurer has no right to refuse an insurance payment if late notification of the insured event was caused by valid reasons on the part of the policyholder (the injured party) or beneficiary, where there are documents substantiating this circumstance;
6) terms on the procedure by which the insurer takes a decision to refuse or to compensate the damage to the injured person, the time limit for taking this decision, its postponement and written notification of the applicant about it;
7) the time limit for drawing up an insurance act in cases where this is provided for by the insurance rules, and an indication in it of the amount of the insurance payment and the procedure for making it available for review by the policyholder (beneficiary);
8) specifying the time limits (calendar or working days);
9) the grounds for releasing the insurer from making an insurance payment;
10) the insurer's liability for incompleteness of the terms that are required to be stated in the insurance contract.
In addition, it is not permitted to include in insurance rules ambiguous terms such as “other documents”, “other rights”, “other obligations”, “other provisions of the laws of the Republic of Kazakhstan”, “and the like”, “etc.”, which the insurer must disclose and specify in full in order to avoid disputes between the parties to the insurance transaction when an insured event occurs.
An integral part of the insurance rules consists of their appendices in the form of the insurance contract form developed by the insurer and a specimen insurance policy, which must contain all the information provided for in the standard form of insurance policy developed by the authorised body.
In addition, the insurance contract must contain:
1) the name, location and bank details of the insurer;
2) the surname, first name, patronymic (if any) and place of residence of the policyholder (if an individual) or its name, location and bank details (if a legal entity);
3) an indication of the object of insurance;
4) an indication of the insured event;
5) the amounts of the sum insured, and the procedure and time limits for making the insurance payment;
6) the amount of the insurance premium and the procedure and time limits for paying it;
7) the date of conclusion and the term of the contract;
8) indications as to the insured and the beneficiary, if they are parties to the insurance relationship;
9) the number and series of the contract (insurance policy);
10) the cases and procedure for amending the terms of the contract;
11) the conditions for payment and the amount of the surrender value (for endowment insurance). The surrender value is the sum of money that the policyholder is entitled to receive on early termination of an endowment insurance contract.
A deductible may be provided for in insurance rules and contracts. A deductible is an exemption of the insurer, provided for by the terms of insurance, from compensating damage that does not exceed a certain amount. The deductible is set either as a percentage of the sum insured or as an absolute amount.
A deductible can be conditional (non-deductible) or unconditional (deductible).
With a conditional deductible, the insurer is released from compensating damage that does not exceed the set amount of the deductible, but must compensate the damage in full if it exceeds that amount.
With an unconditional deductible, damage is in all cases compensated after deduction of the set amount.
By agreement between the policyholder and the insurer, on the basis of the insurance rules, insurance contracts may be concluded that provide for additional terms determined when the insurance contracts are concluded. If the same additional terms recur more than three times, the insurer is obliged, in the manner established by legislation, to amend the rules for the given class of insurance and submit them to the authorised body for agreement.
In accordance with civil legislation, if an insurance contract contains terms that worsen the position of the policyholder compared with those provided for by legislative acts, the rules established by those legislative acts apply.
In accordance with a provision of civil legislation, the Agency also recommends that insurers include their liability for incompleteness of the terms that are required to be stated in the insurance contract, as well as a term that, if a dispute arises under the insurance contract because of incompleteness of some of its terms, the dispute is resolved in favour of the policyholder.
We draw the attention of consumers of insurance services to the fact that an insurance policy specifically contains only the rights and obligations of the parties, and therefore, when concluding a contract by obtaining an insurance policy, it is necessary to study all the terms of the insurance rules carefully.
For this purpose, a consumer of insurance services, when concluding an insurance contract and receiving an insurance policy, has the right to demand from the insurance organisation the insurance rules in full, with a note of the date of their agreement with the authorised body, if they are subject to such agreement.
Providing the insurance rules at the policyholder's request is a direct obligation of the insurer.
Modern electronic processing
A contract can be concluded online, with a notification sent through the Unified Insurance Database and the insurer's channels. An electronic form does not reduce the client's duty to study the terms. Check the sender, the contract number, the details of the object, the start date and whether the rules are available for download.
What to do in a dispute
- Submit a written application to the insurer and keep proof of submission.
- Request a reasoned decision with reference to the contract and the rules.
- Gather the policy, rules, correspondence, photographs, expert reports and receipts.
- If necessary, contact the insurance ombudsman and the authorised bodies.
- Observe the time limits for appeal and the statute of limitations.
Conclusion
Insurance rules are not a formality but a detailed instruction manual for the policy. Studying them before you pay helps you choose the right cover, avoid mistaken expectations and act correctly after an insured event.
This material is for information purposes. Current legislation, the individual contract and the rules of the specific insurer take priority.