Liability resulting from the insurer's negligence and fault in issuing insurance policy in the Compulsory Insurance Law approved in 2016

Document Type : Research Paper

Authors

1 Ph.D. in private law. Ferdowsi university of Mashhad

2 Assistant Professor of Private Law Department, Faculty of Law and Political Sciences, Ferdowsi University of Mashhad, Mashhad, Iran

Abstract

The realm of insurance is intricately intertwined with the protection of societal interests, particularly evident in the context of traffic accidents. Recognizing the significance of this intersection, legislators have transformed insurance contracts from mere agreements into legal-contractual frameworks. The Compulsory Insurance Law of 2016 introduced numerous provisions and judgments that defy easy justification solely based on the principles of free will. Among these provisions is Article 19, which stipulates that "Any negligence or fault of the insurer or their representative in issuing the insurance policy does not remove the liability of the insurer." This article explores the unique civil responsibility imposed upon insurers when they fail to issue a valid insurance policy, transcending conventional contractual boundaries. Beyond its apparent simplicity, this research delves into the foundational aspects of insurer liability arising from negligence or fault in issuing insurance policies and assesses the extent of such liability when breaches occur.
A review of existing literature reveals that Article 19 of the Compulsory Insurance Law (2016) has not received significant attention in legal debates. Researchers have not provided a clear definition of the implications of insurer errors in policy issuance or the underlying basis and scope of insurer responsibility. This lack of comprehensive analysis is partly attributed to the article's apparent straightforwardness, which conceals the complexity of the assumptions it entails. Consequently, this study addresses these gaps by examining various assumptions surrounding insurer behavior.
This research aims to answer critical questions concerning insurer liability in cases of non-issuance of insurance policies, including whether punitive measures can be imposed on negligent insurers in addition to compensation. It also delves into the choice between pursuing compensation for insured losses under legal or contractual obligations of the insurer.
Preliminary findings suggest that insurer responsibility, in cases of non-issuance or violations in policy issuance, extends beyond mere compensation and may include punitive measures against the insurer found at fault. Moreover, the compensation for damages resulting from negligence or fault in issuing insurance policies can be argued within both contractual and legal frameworks, depending on the specific circumstances.
This study primarily aims to identify the behaviors leading to insurer liability as outlined in Article 19 of the Compulsory Insurance Law (2016) and analyze the rationale behind this liability in accordance with the legislative intent. It further evaluates the nature and extent of responsibility envisaged by the legislator, drawing insights from Article 19.
The research findings underscore that Article 19 of the Compulsory Insurance Law (2016) represents a novel approach aimed at safeguarding policyholders acting in good faith. This provision not only obligates insurers to provide the requested insurance coverage but also distinguishes between third-party and driver insurance policies in assigning liability to erring insurers. Importantly, the scope of default liability under this article extends beyond mere compensation to encompass disciplinary consequences for insurers.
While the phrase "does not remove the liability of the insurer" may appear simplistic, the study reveals the nuanced nature of insurer liability. In instances where an oral agreement between the insurer and the insured remains confined to preliminary negotiations without forming a binding contract, the insurer's civil liability is restricted to damages incurred during these negotiations. Conversely, when a contract is established with flawed elements, legal obligations can be imposed on the insurer, with legal remedies available to address any shortcomings in the agreement. Negligence in incorporating the legal privileges of the insured and injured parties within the insurance policy can trigger legislative consequences, filling voids in contractual conditions with the insurer's responsibility to compensate injured parties according to the minimum requirements of the compulsory insurance law.

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References

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Journal of Legal Studies
Volume 15, Issue 4 - Serial Number 50
December 2023
Pages 169-198

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