Talk:Insurance policy/Archives/2012

reserves required by insurance companies for fixed annuities

Is it true that insurance companies are required to keep cash in reserves for fixed annuities.

Insurance policy v. insurance contract

Copied from User:ImperfectlyInformed's talk page.

Hi, it would have been nice, and standard practice, to have opened some discussion first about the best name for the article before making the move. An insurance contract is a distinct thing from an insurance policy. The contract is incorporated in a policy but the policy includes other things such as a copy of the application, etc. Given that the article was specifically about contracts it was probably better to keep it there. There are quite a number of links to redirects to clean up either way. - Taxman ^Talk 13:50, 13 May 2009 (UTC)

My understanding is that if the applications are included in the policy, then they are legally a part of the contract. I don't think it's true that the insurance contract and the policy are different. Insurance policy is the standard name for the particular type of contracts which the article is discussing, and using the precise and standard title avoids confusion over other contracts used in the business of insurance. The The Legal Environment of Insurance says (section 5.16) that "a frequent question concerns which papers and conservations form the ultimate contract. Once an insurer writes the policy, courts consider all prior negotiations or agreements, written or oral, as merged into the writing. Every contractual term in the policy at the time of the delivery ... are part of the written policy. The policy must refer to conditions, endorsements, applications, and other papers if they are to be part of the policy". That's an oversimplification, but I believe the policy is the contract.

A bot will fix the redirects... II | (t - c) 16:34, 13 May 2009 (UTC)

Insurance policy is not insurance contract, but the article says it is

The problem is that the lead of this Article says "..insurance policy is a contract...between the insurer and the insured...". As a law student, I would like to say that an insurance policy and an insurance contract are not one and the same thing. An insurance contract is formed upon offer and acceptance between the parties (the insurer on one side and the insured on the other), even at that time no any insurance policy is drawn up. An insurance policy is a document that the statute (of some country, such as Germany's Insurance Contract Act) required to be provided by the insurer to the insured. It may contain the particulars about the contract, but it is not the contract. It just written evidence that there is a contract between the parties. The insurer may provide it to the insured at the same time as or after the formation of the contract. So, would anyone amend this article? --Aristitleism (talk) 16:52, 16 April 2011 (UTC)

You're not being clear - are you a native English speaker? In order to be recognized, contracts need to be in writing - I'm oversimplifying here, but this is generally true and probably true even for insurance (heard of the "four corners"?). The written evidence of the contract is the insurance policy. Nothing in your above statement contradicts that. Anyway, the lead of the article already discusses oral contracts which happen prior to the policy being delivered. In general, policy = contract, although there can be some specific exceptions. II | (t - c) 20:31, 15 April 2011 (UTC)

(A) Sorry, I'm not. But I can surely say that:

(1) You are correct that the insurance policy is the written evidence of the insurance contract.

(2) But the insurance policy is not the insurance contract (as appeared in this article that "...the insurance policy is a contract...").

(3) The reason for (2) is: The insurance contract can be formed without having to draw up any insurance policy. The contract can be formed either orally or in writting, and it is valid even without any insurance policy.

(4) The statute (of some countries, i.e. Germany) just requires the insurer to give one insurance policy (or more) to the other party (called the insured or policyholder), and just requires that the insurance policy contains the terms of the insurance contract and any other items in connection with the rights and obligations of the parties and bears the signature(s) of the liable party(ies). The purpose of such requirement is that the insured would know about the terms and other details about the contract.

(5) Moreover, the statute (of some countries, including Germany) provides that the claim about the insurance contract is non-actionable if no any written evidence about the contract can be produced before the court. That's another reason why the statute requires the insurance policy to bear the signature of the liable party, so that it would be the written evidence to showed to the court in order to enforce the claim.

(B) I once again insist that the insurance policy is not the insurance contract.

--Aristitleism (talk) 16:57, 16 April 2011 (UTC)

Am I fogged in the difference of the legal systems (common law and civil law)? --Aristitleism (talk) 03:54, 16 April 2011 (UTC)

In the United States, whether or not an oral contract exists or is admissible would depend on the jurisdiction and the judge. But do you see that even if an oral contract can exist prior to the delivery of the written contract, it doesn't mean that the insurance policy is not a contract. The oral contract and the written contract are different things, but clearly the written contract (the policy) is a contract. II | (t - c) 04:28, 16 April 2011 (UTC)

In civil law, a contract is, in general, formed upon offer and acceptance, irrespective of whether the offer or acceptance is in writing or not. As regards certain contracts, the statute requires that they must be made in writing or made in writing and notarially recorded etc., otherwise they are rendered void. This is called "form (of contract)". As for an insurance contract, no form is required. So, an insurance contract is formed when an offer of the insurer is accepted by the insured (or policyholder) or, in most cases, when an offer the insured made through an agent of the insurer is accepted by the insurer (the agent just invites the insured to engage in a contract with the insurer, this invitation is not regarded as an offer). There are several rules governing declaration of intent between persons who are not present, i.e. a declaration of acceptance is valid when the notification of the declaration arrives at the offeror (whether he knows of it or not). Thus, even the offer and the acceptance to engage in an insurance contract are oral, if they accord, the insurance contract is formed immediately (save where it is subject to a time limit or condition). The insurance policy is not a complement of the insurance contract, that is to say, it is not the contract. The insurance policy it is just written evidence to prove that there is a contract, as well as rights and obligations, between the parties. And the statute just requires the insurer to provide it to the insured for the purposes I have mentioned above. --Aristitleism (talk) 05:31, 16 April 2011 (UTC)

Added that written evidence of the insurance contract may be any document which is likely to prove the existence of the contract and of the rights and obligations between the parties. It is not necessary that written evidence must be the insurance policy only. --Aristitleism (talk) 06:55, 16 April 2011 (UTC)

You're making an extremely technical and pointless point, which also seems to be contradictory. In your first paragraph you said that Germany's contract law requires that the "written evidence be provided" showing the details of the insurance contract (apparently entirely oral and therefore rather nebulous) - the written evidence would be what we Americans (and all English-speaking people, and actually most Europeans in my experience) call a written contract - there's no other word for it. You're saying now that the "no form is required" for an insurance contract, which completely contradicts the German law you cited in your first paragraph. Regardless, you're going to have to have sources to add this to the article, and I doubt sources will have said such odd things as you've been saying. In practice, insurance is not transacted orally, and when an oral contract occurs, it is soon superseded by the written contract. Insurance is transacted in writing. Written applications are completed and a written policy is issued immediately. So there's not much point in discussing oral contracts at length, and in general contracts in insurance are certainly not some nebulous oral agreement. In the United States, the "four corners" approach to contract law is often cited - that means that the contract is entirely determined by the four corners of the page - the writing. Regardless, the lead already states that "Oral contracts pending the issuance of a written policy can occur". I hope that you can realize how pointless this discussion is and direct your attention to something more substantive. I realize that law school can make you think like this, but I hope you resist that pull and try to take a more big picture approach in the future. II | (t - c)

In civil law, the "written evidence" is not a form of a legal transaction (the term used in the German Civil Code) or juristic act (the term used in the Japanese Civil Code). Given that a contract is a kind of legal transaction. A legal transaction will be void if it is not conducted according to the form prescribed by statute (see GCC, s 125 for instance). If the statute requires you to have written evidence for any legal transaction, and you do not have it, then your legal transaction is not void, but it is just non-actionable. In case of insurance contract, the statute (of some countries, such as Germany) does not provide any form for it. Thus, it can be formed either in writing or orally. But, the statute prescribes that, in order to enter in ourt a claim with respect to an insurance contract, any written evidence must be produced. Written evidence may be any document which can show that Mr A is obliged to do this thing for Mr B and vice versa for example. It may be a piece of toilet paper containing information that Mr A and Mr B has engaged into a contract C and bearing the signature of the liable party. So, an insurance policy can be produced as written evidence, that is to say, written evidence concerning an insurance contract does include an insuance policy. Apart from being able to be used as written evidence, an insurance policy is required by statute to be provided by the insurer to the insured in order to provide the insured knowledge about the terms of the contract and other information concerned (the statute requires the policy to contain such information). When the statute requires any legal transaction to be carried out in a form of writing or notarially recorded writing, then it won't require any written evidence any further. Once again, I insist that an insurance policy is not an insurance contract, it's just a document that the statute needs for certain purposes. And I can say that these purposes do not include the formation of a contract). --Aristitleism (talk) 17:30, 16 April 2011 (UTC)

Sorry, I don't think I'm wasting my time discussing this. Like you, my aim is to improve Wikipedia. To rectify any wrong or incomplete information provided here is to improve Wikipedia, isn't it? Anynow, I would like to ask for forgiveness if I've done anything wrong or displeased you. --Aristitleism (talk) 17:46, 16 April 2011 (UTC)

Sorry for lashing out at you a bit. It's actually interesting to hear about the European/civil law perspective, but I was just frustrated at what I saw as inconsistencies. Still, I don't think I can continue to discuss this unless you bring some actual sources discussing the policy is "not a contract" in European law. In fact, the Germany's Insurance Contract Act that you linked prior refers often to the contract as being essentially identical to the policy as it is usually meant. For example, section 8 says: "(2) The revocation period shall begin at such time as the policyholder receives the following documents in writing: 1. the insurance policy and the terms of contract, including the general terms and conditions of insurance, as well as the other information in accordance with section 7 (1) and (2)" - the terms of the contract are in the policy, so these documents are one and the same (regardless of the way the German law is written). II | (t - c) 00:59, 17 April 2011 (UTC)

I think Aristitleism's point here boils down to saying that in some jurisdictions, an insurance policy is just a part of the insurance contract, although almost definately the most important and possibly the only part of it. So in theory you could verbally agree a contract which was say "I will pay you the premiums if you provide me buildings and contents insurance under your standard terms and pay for my bus ride home" and under German law, the company wouldn't need to mention the bus ride if you asked for a copy of the policy. It's kind of a technical point but it may be worth pointing out that the two things are not always identical. (Not an insurance expert so please don't bollock me if I've got this wrong) Bob House 884 (talk) 18:08, 16 April 2011 (UTC)

I think under German law the bus ride provision would certainly have to be written to be valid. I think the point that Aristitleism is making is similar to this: imagine you have an idea, and then you write down that idea. The written expression of that idea is not the idea. The idea existed only in your head, and the written expression is only an imperfect copy of the idea. Similarly, when two people decide to enter into a contract, both have an idea of what they're getting, and their two ideas don't necessarily match, but they are supposed to match. Aristitleism seems to be saying that in German law, their ideas (nebulous and conflicting as they may be) are the contract. There's a presumed meeting of the minds. The written contract, according to Aristitleism, is just "written evidence" and is not the true contract. In American law, the written evidence really is considered the contract. This avoids all the problems of conflicting expectations if the written document is written clearly. At the same time, I have to admit that judges do acknowledge, in a way, another more abstract contract. The written contract is often worded in such a way that it doesn't convey what the parties thought it did (or in such a way that one party knows what it means and the other doesn't). That leads to court doctrines like "reasonable expectations", contra proferentem, implied covenant of good faith and fair dealing, etc which influence how the courts interpret the written contract. On some level you might think that that reflects the "true contract", as opposed to the written contract, but American lawyers and judges don't talk about it like that. But we can't go much further in this discussion without sources. II | (t - c) 00:59, 17 April 2011 (UTC)

Yes, under German law (and law of other countreis modelled on it, such as Japan), written evidence is not always a contract. You and you friends may conduct a legal transaction in writing if you want to, even the statute says that you don't have to do so, according the principles of freedom of contract and of autonomy of will. But, if the statute requires you do comply with any form and you don't, your legal transaction will be void. I would like to underline that, under German law, no form of legal transaction is prescribed for insurance contract. (When it requires any form to be abided by, it would say "A contract of purchase of immovable property is void if it is not concluded in writing and notarially recorded." for example). The principle of legal transaction developed by German jurists might be unfamiliar to you and western countries (even in France who adopts civil law system like Germany), in which the principle of contract governs. Both principles are different in some way, and I won't explain that here. When no form is required, then your legal transaction may be conducted in any form according to your free will. That's thoery, but, in fact, people may prefer to conduct certain legal transactions in any specific forms. The example is this insurance contract that is usually concluded in writing. It's just the people's free will, not the statutory requirement. I mean that, in so far as the statute does not prescribe that writing is a form of insurance contract, then it is not a form of insurance contract and an insurance contract can be concluded orally. So, in the eyes of German law, an insurance policy is not an insurance contract, it's just a document required for certain purposes (including to be used as written evidence as to insurance contract). The insurer and his client may have a writing on which the terms of their insurance contract are written, but he is required to provide an insurance policy to that client still. I'm trying not be verbose and you're right that we can't go further without sources. --Aristitleism (talk) 02:57, 17 April 2011 (UTC)

I think ImperfectlyInformed is getting at the key difference here, although I want to add that another key difference arises from the common law concepts of consideration, parol evidence, the Statute of Frauds, and integration. That is, once the parties have reduced their contract to an integrated writing and consideration has actually been given (i.e., payment of the policy premium), a lawyer trained in the common law will view the written contract as virtually synonymous with the contract. Also, there's the rule that there cannot be an express contract and an implied contract both covering the same subject matter.

It is theoretically possible, of course, for coverage to impliedly arise by reliance or estoppel, but those circumstances are extremely rare. Usually either the lack of consideration or the unreasonability of the reliance is fatal to such theories. --Coolcaesar (talk) 19:09, 17 April 2011 (UTC)