Apr 9

Insurance law basics

  The legal relationships connected with insurance agreements (insurance policies) and their fulfillment / non-fulfillment, filing claims against the insuring company, the insuring company recourse claims against the tortfeasor and a number of issues related thereto are all part of the subject of insurance law. Generally speaking, insurance law regulating legislation could be found in the Insurance Code of Bulgaria (IC), the Contracts and Obligations Act of Bulgaria (COA) and the Commercial Act of Bulgaria (CA).

  Although insuring companies often come up with new kinds of insurances, from a legal point of view the insurance agreements (insurance policies) can only stipulate insurance types explicitly provided for in the law. They range from indemnity insurance, contingency insurance and savings insurance, to third-party insurance, third-party insurance being a type of a indemnity insurance.

  Parties having any type of connection whatsoever to the insurance legal relationship may have different legal titles – the insuring company, the insurer, the insured party, the third party. Usually the role of the insurer and the insured party combine in one and the same party, but it is also possible that the insurer differs from the insured party – such is the case with passenger insurance policies, which are signed by transporting companies but for the sake of the passengers. The insuring company could be a joint-stock company, a mutual insurance cooperation, a European company or a brand of a foreign insurance company. An example of a third party in the legal insurance relationship is the injured party in a third-party insurance, by virtue of which the injured party holds the right of a direct claim against the insurance company in spite of not being a party to the insurance legal relationship.

  The insurable interest and the insurance risk are among the main terms regarding insurance law and at the same time are prerequisites for the validity of the insurance agreement (policy). The insurance risk is a two-meaning term – from one side it is used for designating the insured event, by the occurrence of which arises the insurance company obligation to make an insurance payment, while on the other side the term insurance risk is used to designate the probability for the occurrence of the insured event and the thereto related damaging result. The probability for the occurrence of the insured event has a determining role regarding the amount of the insurance premium owed to the insurance company by the insurer. Upon a change of the probability for the occurrence of the insured event the insurance premium varies in accordance to it regardless that its amount has been stipulated upon signing the insurance agreement (policy). The insurable interest represents the worth which the insured party risks upon the occurrence of the insured event. The insurance agreement is terminated by virtue of the law the very moment that the insurable interest vanishes.

  Upon the occurrence of the insured event the insured party acquires the right to demand payment from the insurance company at the amount of his/her/its damage but within the previously stipulated insurance limit. By third-party insurances the injured party has the right of a direct claim against the insurance company of the wrongful tortfeasor. In turn the insurance company has the right of a recourse claim against the third-party insurance insured party in cases when the harm has been caused deliberately. When the party which has caused the damage has a third-party insurance, and the harmed party has an indemnity insurance (of the car insurance type, for instance), the indemnity insurance company subrogates in the harmed party rights against the harm causing tortfeasor or his/her third-party-insurance company – within the amount of the compensation paid and the usual payments made for its assessment.

  The specifics of the insurance legal relationship, the variety of parties and state authorities, having some sort of connections to it and the specifics of the insurance agreement (policy) as a separate kind of a commercial deal determine the complexity of insurance law as a separate branch of commercial law and call for the need of a careful and professional approach upon solving each separate insurance case.