I. General matters concerning all types of insurance
Besides the obligation by an insurance company to pay out after the occurrence of a specified event or accident, there are other essential elements in the formation of an insurance policy.
Under the insurance laws of Hong Kong , speculation refers to the probability of the insured event occurring during the period the insurance policy is in force. The occurrence of such an event should be uncertain to both the insurance company and the insured person/policyholder. For example, in the case of life insurance, during the period covered by the insurance, neither party knows when the insured person will die.
Risk and Premium
The insurance company should decide whether or not to accept to insure against the risks of speculation for a particular event. If an insurance policy is granted, the insurance company would set out the terms and conditions of the policy, and charge a premium (an amount to be paid by the insured person for buying such insurance) commensurate with and in recompense for the risks assessed.
Utmost good faith
It is a fundamental principle of insurance law that the parties to the contract deal with each other in utmost good faith. The requirement to deal in utmost good faith is reciprocal between the parties involved.
The following may help illustrate the responsibility of utmost good faith on the part of the insured person. All the facts and the circumstances surrounding the subject item of the insurance desired would be known to the insured person only. The insurance company relies on the disclosures and representations made by the insured person (i.e. information given by the insured person). Therefore, any one who wishes to purchase insurance is required to be honest and make full disclosure of all pertinent facts and circumstances so that the insurance company is fully informed of all the risks involved.
An insurance policy is a kind of contract. Therefore, the usual elements for making commercial contracts (including "offer" and "acceptance") also apply to insurance contracts.
- What is "insurable interest"?
- The insured persons or policyholders might sometimes fail to disclose all their personal information to the insurance company. Will such a non-disclosure lead to the rejection of claims? What important facts must be disclosed?
- Further to the question above, if a piece of non-disclosed information is not related to a particular claim (e.g. I submit a claim due to an injury from playing football, but I had not previously mentioned my smoking habit), can the insurance company still reject such claim?
- What are the usual "exclusion clauses" (insurance coverage or claims to be excluded) in an insurance policy?
- I paid the premium one week late (or one month late). Is my policy still valid? Will the insurance company deny my claim if an accident happened immediately before my premium payment?
- The insurance company has delayed processing my claim. Can I claim interest due to such a delay?
- I have taken out several insurance policies covering the same risk (e.g. hospital confinement or household damage). Can I claim for the sum insured under ALL policies or just the actual expenses/losses only? Is the claim for the death benefit under life insurance subject to different rules?
- There are two types of insurance intermediary, namely "insurance agent" and "insurance broker". What are the differences in their roles/functions and qualifications? Are they required to be registered before performing their work?
- I am not satisfied with the compensation and the conduct of my agent/insurance company. Shall I settle the dispute in court, or approach other organizations? Do the courts or other organizations impose a limit on the amount of any claim in each case?
- My agent made some false statements which induced me to buy insurance from him. Can I terminate the policy and ask for a refund of the premiums?
- My agent asks me to pay him cash so that he can pay my premiums promptly on behalf of me. Is he allowed to handle premium payments in this way?