Legal Framework of an Insurance Contract
Drafting and auditing insurance contracts in Georgia rests on the Law of Georgia on Insurance, which defines both the essence of the relationship and the circle of its participants. Under the law, insurance is a relationship established to protect the personal and property interests of natural and legal persons, at the expense of monetary funds formed from insurance contributions (insurance premiums) and other sources permitted by legislation, upon the occurrence of certain circumstances — insured events. Insurance activity, in turn, is the activity of an insurer connected with the conclusion and performance of insurance and reinsurance contracts.
Correct drafting depends on the precise use of the statutory concepts. An insurer may be a joint-stock company holding a licence for the relevant type of insurance, or a branch (representative office) founded in Georgia by an insurance and reinsurance organisation registered and licensed abroad. The other core concepts operate as follows:
- policyholder — a natural or legal person who has concluded an insurance contract with the insurer;
- insured person — a person in whose respect insurance is carried out (the policyholder may simultaneously be the insured person);
- beneficiary — a person who receives insurance compensation under the contract or under compulsory insurance legislation;
- insurance agent — a person acting on the insurer's behalf and instruction, within the authority granted;
- insurance broker — a self-employed entrepreneur or legal person registered with the Insurance State Supervision Service as an intermediary;
- insurable risk — an event bearing the features of possibility and chance, for which insurance is taken out;
- insured event — an event upon whose occurrence the contract provides for payment of insurance compensation;
- insurance policy — a signed document issued by the insurer certifying the insurance contract.