obligation of the insured to notify the insurer with the new circumstance that might increase the insured risk The insurance laws obliged the insured WhatsApp: +971555570005
The obligation of the insured to notify the insurer with the new circumstance that might increase the insured risk
The insurance laws obliged the insured – among the obligations by which he has committed towards the insurer – to notice the insurer, in one of the emergency situations, required to increase of the risks towards the insured , that is an extension to his initial obligation, when concluding the contract, by presenting the required data to allow the insurer to be aware of the nature of the insured risk and the probability of achieving it. Based on the data\ information that the insured has placed in the insurer’s possession, the insurer can assess the risks that may threaten the insurer, on the basis of which the insurer can estimate the insurance for the insured against suitable instalment.
If the situation has changed, as a result of new circumstances, the insurer recalculates and resorts to one of the options made available to him by the applicable laws and regulations, which are either the dissolution or continuation of the contract without any change or continuation of coverage with an increase in the annual premium paid by the insurer to the insured .
The argument is that the insurance contract was initially concluded based on specific circumstances that the insurer knew and estimated that he could cover. When these circumstances and facts change if the risk increases or the risk gravity increases. The insured may find it difficult to continue covering the insurer in return for the same installment agreed upon at the conclusion of the contract, even if he was aware of it at the time of conclusion of the contract he would refrain from contracting or to contract only in exchange for a larger instalments, so the insured must notify the insurer in any emergency period within a maximum of ten days from the date of knowledge, However, these new circumstances need to be met with certain conditions so that the insured will be obligated to notify the insurer, and these conditions are as follows:
First condition:
These circumstances shall be new, and occurred after the agreement and the conclusion of the insurance contract and during the validity period thereof, said circumstance shall be able to cause a real increase in the risk so that if it was existed before the conclusion of the contract the insurance company would have prevented from the insurance or accepted in exchange for a larger instalment, However, this increased risk comes from two directions:
• the increasing risk potentials.
• the increasing risk gravity if happened
Increasing the risk potentials is the most common condition. It means increasing the possibility of an insured accident, such as changing the insured of his vehicle, using his vehicle, personal use only to invest it as a taxi, or the security agent changes his profession to another dangerous profession. Such as work in the mines, as well as if a person insured his house against fire, and then invest his cellar as a warehouse for the storage of inflammable materials.
The second condition:
That the insured is aware of the new circumstances that have led to an increase in the risk, and certainly relieves him of his ignorance of the notification.
The increase of the risk as a result of new circumstances occurred after the conclusion of the insurance contract obligates the insured to notify the insured of those circumstances, and here must distinguish between two cases:
If such circumstances have occurred or caused by the Insured himself, he is undoubtedly aware of them, and in such a case the Insurer must know his intention to create such conditions, and it is necessary that the notification to be served before the creation of the new circumstances not after that.
• If the new emergency circumstances are not created by the insured but by third parties, he is obliged to notify the insured if he is aware of them, and if he is not aware of them, he is not obliged to notify him.
In light of the aforementioned, informing the insurer of any new circumstances that increase the insured risk is an obligation imposed on the insured by the legislator. This is only an extension of his initial obligation to provide the insured with the necessary data when concluding the contract.
Attorney / Mohamed Al Marzooqi
Mohamed Al Marzooqi advocates & Consultancy
Lawyer in Abu Dhabi, Dubai – UAE
