In the event of the disappearance of the insured object or the termination of an insurance contract prior to the end of the coverage period, is the company obliged to refund premiums?
The premium is indivisible since the insurer bears the total risk at each moment of the contract’s duration (annual according to article 22 of the LCS), and not for fractions of time.
Can there be a refund of premiums if the payment was divided?
The principle of indivisibility of the premium implies that the premium is due and corresponds to the insurer in its entirety during the entire period agreed as the duration of the contract, although the payment is made in installments by agreement between the parties (either monthly, quarterly, … ). Thus, if the circumstance occurs that there is a total loss or a cancellation of the insured object either by transmission or by any other cause that implies the disappearance of it, the policyholder owes the fractional premiums pending payment, and in the case having paid them at the beginning of the period, no right assists you in recovering a certain part of it.
There is no possibility of refund of premiums?
In the event of an agreement between the parties, a different solution can be adopted, such as applying the unconsumed premium to a new insurance. Some insurance companies usually insert in their policies a clause in which in case of disappearance or transmission of the insured object during the coverage period, they maintain the unconsumed premium for a period of time in order for the insured to apply said amount to the insurance of a new object.
The existence of a contractual clause like the previous one in no case implies an abusive or limiting conduct of the rights of the insured by the insurance company.
In conclusion, in the event of termination of the contract prior to the end of its duration period, the part of the premium not consumed is due to the insurer, unless otherwise provided in the policy.
Who regulates the increase in premiums in insurance in general?
The premium rates must be sufficient, according to reasonable actuarial assumptions, to allow the insurance company to satisfy all the obligations derived from the insurance contracts and, in particular, to constitute the appropriate technical provisions. Likewise, they will respond to the regime of freedom of competition in the insurance market without, for these purposes, the use of risk premium rates based on common statistics having the character of a restrictive practice of competition.
What is the principle of sufficiency of the premium?
The principle of sufficiency establishes that the premium rates to be applied by the insurance entities must be sufficient, in such a way that they allow the entity to satisfy all the obligations derived from the insurance contracts. This, without a doubt, constitutes a guarantee of solvency, necessary for the exercise of the insurance activity for the sake of future fulfillment of the obligations contracted.
It should also be noted that premium rates are not subject to administrative authorization.
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