Legal Basis of an Insurance Compensation Dispute
An insurance compensation dispute in Georgia depends first of all on who is entitled to claim compensation. Under the Law of Georgia on Insurance, the insured person is the person in whose respect insurance is carried out, and the policyholder may simultaneously be the insured person unless the contract provides otherwise. The beneficiary is a natural or legal person who receives insurance compensation under the insurance contract or under legislation on compulsory insurance. A beneficiary may be designated both in personal insurance and in property insurance.
Under compulsory insurance the beneficiary is determined by the legislation regulating the given type of insurance, while under voluntary insurance the beneficiary is appointed by the policyholder. If no beneficiary is designated in the contract, the insured person is deemed to be the beneficiary. A property insurance contract may be concluded in favour of a beneficiary without indicating the beneficiary's name — as a policy payable to bearer; in that case the beneficiary is whoever presents the relevant document to the insurer. These details frequently prove decisive in contested cases.
Consequences of Violating Compulsory Insurance Rules
The law establishes clear guarantees where the rules of compulsory insurance are violated. If a person with respect to whom compulsory insurance must be carried out by force of law is not insured, that person is entitled to demand, in court proceedings, that the policyholder burdened with the obligation to insure carry out the insurance. Furthermore, if the policyholder failed to conclude an insurance contract, or concluded it on conditions that worsen the insured person's position compared with the conditions provided for by legislation, then upon the occurrence of an insured event the policyholder is obliged to compensate the insured person for the damage in the amount the insured person would have received had the insurance existed.
In addition, the policyholder is entitled to demand in court that the insurer conclude a compulsory insurance contract in the manner prescribed by law, since under compulsory insurance the insurer is obliged to contract on statutorily fixed conditions. These norms create the legal foundation by which an insured person defends his interests when the obliged person abstains from insuring.
Third-Party Insurance and Transfer of Rights
In property insurance, an insured person who is not the policyholder must have an interest in preserving the property. Under compulsory insurance the consent of a third party is not required for concluding a contract in which that party will be designated as insured; under voluntary insurance, that party's refusal makes conclusion impossible, or, if the contract has already been concluded, leads to its amendment or termination. Where the policyholder is obliged to insure a third party, the latter may demand from the policyholder an account of the performance of the obligation and, in cases provided for by legislation, also an insurance confirmation document.
The inheritance rules are equally practical: upon the death of an insured person who is not the policyholder, the insurance contract terminates unless replacement of the insured is provided for by legislation or the contract. In property insurance, the rights and obligations of the insured pass to the heir with the policyholder's consent. Where the insured refuses to accept the insurance compensation due, the right to receive it passes to the policyholder. Every such circumstance must be precisely assessed when preparing a claim.
Consumer Protection and Avenues for Disputes
When claiming compensation, the insured enjoys the status of a consumer, and the law protects him at every stage of performance of contractual obligations. The insurer and the insurance intermediary must ensure the protection of consumer rights from the pre-contractual relationship until the obligations are fully performed. A consumer is entitled, where obligations assumed by the insurer or the insurance agent are improperly performed, to apply to the relevant structural unit of the insurer, to a court or to any other authorised institution, and, where his rights are violated, also to the Insurance State Supervision Service of Georgia. Similar avenues are available against an insurance broker's non-performance.
Sanctions of the Supervisory Authority
The Service possesses effective sanction instruments. Sanctions may be applied to an insurer and/or administrator where they violated a provision of the law, a Service norm, instruction or written directive, a reporting deadline, consumer-protection requirements or other legislation. The ladder of sanctions is sequential: a written warning; special measures or an instruction to eliminate the violation; a monetary fine in the manner and amount established by the Service; suspension of an administrator's signing authority and a demand for his temporary removal or dismissal; suspension or restriction of profit distribution, dividends, material incentives and new obligations; in a special case, suspension of specific operations and the introduction of compulsory administration; and, ultimately, revocation of the insurance licence.
Against an insurance broker the sanctions are a warning, measures or an instruction, a monetary fine and cancellation of registration. Sanctions must be proportionate to the seriousness of the violation and the possible threat, and fines are channelled into the state budget. For the insured this means that the supervisory authority's response is real and multi-stage.
Frequently Asked Questions
What happens if the person obliged to insure does not do so?
The insured may demand performance of the insurance from the policyholder through the court and, upon an insured event, compensation of the damage in the amount that would have been received had the insurance existed.
Who is the beneficiary and how is the beneficiary determined?
The beneficiary is the person entitled to receive compensation: under compulsory insurance the beneficiary is determined by the relevant legislation, under voluntary insurance by the policyholder, and absent any designation the insured person is the beneficiary.
Where does the insured complain about a refusal to compensate?
The consumer applies to the insurer's structural unit, a court or another authorised institution, and on violation of rights also to the Insurance State Supervision Service, which disposes of sanctions as well.
How are rights transferred upon the insured's death?
On the death of the insured the contract terminates unless replacement is provided for; in property insurance the rights pass to the heir with the policyholder's consent, and a refusal of compensation transfers the right to receive it to the policyholder.
How We Help on Legal.ge
The Legal.ge team helps prepare insurance compensation disputes: we assess the contract and the facts, determine the beneficiary's status, draft the claim to the insurer and, where necessary, represent you in court or before the supervisory authority. Write to us and we will plan an effective strategy.