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Insurance

TITLE III. INSURANCE

Chapter 1. General Provisions

Art. 654. – Definition.
1.    An insurance policy is a contract whereby a person, called the insurer, undertakes against payment of one or more premiums to pay to a person, called the beneficiary, a sum of money where a specified risk materialises.
2.    Where damages are insured, the insurance policy the risks affecting property or arising out of the civil liability.
3.    Where persons are insured, the insurance risks arising out of death or life, or to risks the person or illness shall extend to insured person’s policy shall extend to arising out of injury to the person or illness.

Art. 655. – Scope of application of this Title.

1.    The provisions of this Title shall apply to insurance of risks arising on land, on rivers or in the air.
2.    They shall not apply to marine insurance which shall be subject to the relevant provisions of the Maritime Code, nor to State insurance.

Art. 656. – Insurance companies.

    The conditions on which physical persons or business organisations may carry on insurance business shall be provided by law.

Chapter 2. Provisions applicable to all forms of insurance

Section 1. Insurance Policy
Art. 657. – Proof of contract of insurance.
1.    The contract of insurance shall be supported by a document called an insurance policy.
2.    The policy may only be varied in writing by documents called endorsements.
3.      The insurer and beneficiary shall be bound where, prior to the signature of the policy or endorsements, the insurer hands to the beneficiary a document setting up a provisional guarantee until the policy or endorsement is signed.

Art. 658. – Particulars in the policy.

 The insurance policy shall show:
a.    the place and date of the contract;
b.    the names and addresses of the parties;
c.    the item, liability or person insured;
d.    the nature of the risks insured;
e.    the amount of the guarantee;
f.    the amount of the premium;
g.    the term for which the contract is made.

Art. 659. – Entry into force of insurance policy.

1.    Unless otherwise expressly specified, the insurance policy shall come into force on the day when the policy is signed.
2.    Provisions may be made to the effect that the policy shall only come into force after the first premium has been paid.

Art. 660. – Policy to order.

1.    The policy may be in the name of a specified person or to order.
2.    The insurer may set up against the assignee or endorsee the defences which he could have set up against the original beneficiary.

Art. 661. – Policy made on-behalf of a third party.

1.    An insurance policy may be made by an accredited agent.
2.    An insurance policy may be made on behalf of a third party even where the subscriber is not an agent. The beneficiary may avail himself of the insurance policy where he accepted it. Such acceptance may be given even after the risk insured has materialised. The subscriber shall incur all liabilities under the contract until the policy is accepted by the beneficiary.

Art. 662. – Policy made for an unspecified third party.

1.    A contract of insurance may be made for an unspecified third party who may eventually have an interest. It shall be deemed to be made on behalf of the prospective beneficiary.
2.    The subscriber of a policy under sub-art. (1) shall be liable to pay the premiums. The insurer may set up against the beneficiary the defences which he could have set up against the subscriber.

Section 2. Rights and duties of the parties

Art. 663. – Risks insured.

1.    The insurer shall guarantee the beneficiary against the risks specified in the policy.
2.    Unless otherwise agreed, risks arising out of unforeseen events or the negligence of the beneficiary shall be covered by the insurance.
3.    Notwithstanding any provision to the contrary, risks arising out of the intentional default of the beneficiary shall not be covered by the insurance.

Art. 664. – Faults committed by persons for whom the beneficiary is responsible.

1.    The insurer shall guarantee the beneficiary against losses or damages due to the fault of persons for whom the beneficiary is responsible.
2.    The provisions of sub-art. (1) shall apply regardless of the nature or gravity of the fault committed.

Art. 665. – Duties of insurer.

1.    The insurer shall pay the agreed sum within the time specified in the policy or when the risk insured against occurs or at the time specified in the policy.
2.    The insurer’s liability shall not exceed the amount specified in the policy.

Art. 666. – Payment of premiums.

1.    The beneficiary shall pay the agreed premium at the time specified in the policy.
2.    Notwithstanding any provision to the contrary, the policy shall not terminate as of right when the premium is not paid in due time. The insurer shall demand payment.
3.    Notwithstanding any provision to the contrary, the policy shall be suspended after one month from a demand under sub-art. (2) where the premium is not paid.
4.    Where the period of one month has expired, the insurer may claim payment of the premium or require the termination of the policy.
5.      Where the premium is paid, the policy shall re-enter into force on the day of payment.
6.    The provisions of this Article shall not apply to life insurance.

Art 667. – Statements on making proposals for a policy.

    On making proposals for a policy, the beneficiary shall state exactly all the circumstances within his knowledge and which are likely to assist the insurer to appreciate fully the risks he undertakes to insure.

Art. 668. – Facts concealed and false statements.

1.    The policy shall be of no effect where the beneficiary intentionally concealed facts or made false statements and such concealment or false statements cause the insurer wrongly to appreciate the risks to be insured so that, had he been aware of the truth, the insurer would not have entered into the policy or would have imposed terms less favourable to the beneficiary. The insurer shall retain all premiums paid.
2.    Notwithstanding any provision to the contrary, the policy shall remain in force where concealment or false statements are not deliberate and it cannot be shown that the beneficiary acted in bad faith.
a.    Where concealment or false statements are discovered before the risk materialises, the insurer may terminate the policy by giving one month’s notice or may maintain the policy and increase the premium.
b.    Where concealment or false statements are discovered after the risk has materialised, the sum to be paid by the insurer shall be reduced having regard to the difference between the premiums actually paid and the premiums which ought to have been paid, had the beneficiary not concealed the facts or made no false statements.

Art. 669. – Increase of risks.

1.    Where the risks increase in such a manner that the insurer, had he known the facts at the time when the policy was made, would not have entered into the policy or would have imposed terms less favourable to the beneficiary, the beneficiary shall inform the insurer within fifteen days from the occurrence increasing the risks, where such occurrence is due to the beneficiary, or within fifteen days from the beneficiary being aware’ of such occurrence. These periods may not be shortened in the policy.
2.     The insurer may terminate the policy or maintain it and increase the premium.
3.    The provisions of Art. 668 shall apply where the beneficiary does not inform the insurer under sub-art. (1) or gives false information.
4.    The provisions of this Article shall not apply to life insurance.

Art. 670. – Occurrence of risk to be notified.

1.    Unless he is prevented by force majeure, the beneficiary shall inform the insurer of any occurrence likely to render the insurer liable as soon as he knows of such occurrence or within not more than five days.
2.    This period may not be shortened in the policy.

Art. 671. – Bankruptcy.

1.    The insurance policy shall not terminate as of right where the beneficiary is declared bankrupt. The trustees in bankruptcy shall benefit by the policy and shall be liable for the unpaid premiums.
2.    The trustees in bankruptcy and the insurer may terminate the policy within three months from the judgment in bankruptcy.
3.    The policy shall terminate within one month from the insurer being declared bankrupt.

Art. 672. – Death of beneficiary.

1.    Notwithstanding any provision to the contrary, the policy shall continue with the heirs where the beneficiary dies.
2.    The heirs and the insurer may terminate the policy within three months from the beneficiary’s death.

Art. 673. – Assignment of object insured.
1.    Notwithstanding any provision to the contrary, the policy shall continue with the assignee where the object insured is assigned.
2.    The assignee and the insurer may terminate the policy within three months from the assignment.

Section 3. Limitation

Art. 674. – Limitation.
1.    Any claim arising out of a contract of insurance shall be barred after two years from the occurrence giving rise to the claim or from the day when the parties knew of the occurrence.
2.    In case of concealment or false statements, the period of limitation shall run from the day when the insurer knew of the concealment or false statement.
3.      The periods provided in this Article may not be shortened in the policy.

Chapter 3. Insurance against damages

Section 1. Insurance of objects
Art. 675. – Insurance permitted.
1.    Any person interested in the preservation of an object may insure it.
2.    Any direct or indirect interest in a risk may be in8tlred.

Art. 676. – Risks excluded.

1.    Unless otherwise agreed, the insurer shall not be liable for losses or damages due to international or civil war.
2.    The insurer shall establish that the loss or damage occurred as provided in sub-art. (1).

Art. 677. – Loss of object insured.

    The policy shall terminate as of right where the object insured is lost for a reason not specified in the policy.

Art. 678. – Compensation.

    A contract for the insurance of an object is a contract for compensation. The compensation shall not exceed the value of’ the object insured on the day of the occurrence.

Art. 679 – Object underinsured.

    Where on the day of the occurrence the object insured is of a value greater  than the amount for which it is insured, the insured person shall be deemed to be his own insurer for the difference and shall share proportionately in the damage, unless otherwise provided in the policy.

Art. 680. – Object over insured.

1.    Where the compensation provided in the policy exceeds the value of the object insured and ‘there has been fraud on the part of either party, the other party may require the policy to terminate and may in addition claim damages.
2.    Where there has been no fraud, the policy shall remain in force but to the extent only of the actual value’ of- the object insured.
3.    Where the beneficiary requires the insurance to reduced, the insured shall be entitled to reduced premiums but he shall retain all premiums paid prior to the reduction.

Art. 681. – Cumulative  insurance.

1.    Where several insurers insure the same object against the same risk so that the object is over insured, each insurer may, where there has been fraud on the part of the beneficiary, require the termination of the policy and may in addition claim damages.
2.    Where the beneficiary is in good faith, each insurer shall, where the risk materialises, pay compensation in proportion to the value insured by him.
Art. 682. – Loss of object insured.
1.    The policy shall be of no effect where, at the time when it is made, the object is already lost or no longer exposed to a risk. The premiums paid shall be refunded to the beneficiary.

Art. 683. – Substitution of insurer.

1.    The insurer who has paid the agreed compensation shall substitute himself to the extent of the amount paid by him for the beneficiary for the purpose of claiming against third parties who caused the damage.
2.    Where the beneficiary makes substitution under sub-art. (1) impossible, the insurer may be relieved in whole or in part of his liabilities to the beneficiary.
3.     Notwithstanding any provision to the contrary, the insurer may not claim against the ascendants, descendants, agents or employees of the insured person nor against persons living with him, unless such persons have acted maliciously.

Art. 684. – Rights of privileged and secured creditors.

1.    Notwithstanding any provision to the contrary, where a mortgaged object is insured, compensation shall be paid to the mortgagee. The mortgagee may claim directly from the insurer who may set up the defences which he could have set up against the beneficiary.
2.    Payments made in good faith by the insurer to the insured in ignorance of the mortgage shall be valid.

Section 2. Insurance of liability for damages

Art. 685. – Insurer when liable.
The insurer who insured a liability for damages shall not pay compensation until a cliam is made against the insured person with a view to amicable or judicial settlement.

Art. 686. – Liability admitted.

1.    Provisions may be made to the effect that admission of liability or compromise made without the insurer’s consent may not be let up against the insurer.
2.    Admission fact does 110tamount to admission of liability.

Art. 687. – Direction of the case.

1.    Provisions may be made to the effect that the insurer shall have the direction of any civil case originating from a claim brought by the injured party.
2.    Any provision to the effect that the insurer shall have the direction of any criminal case originating from criminal proceedings instituted against the beneficiary shall be of no effect. The’ beneficiary may, in particular, exercise or refuse to exercise his right of recourse.

Art. 688. – Compensation to be paid to injured party.

1.    No insured person shall receive compensation until the third party injured has been paid to the extent of the amount insured.
2.    Any stipulation contrary to the provisions of this Article shall be of no effect.

Chapter 4. Insurance of persons


Section 1. General provisions

Art. 689. – Amount insured freely fixed.
A contract for the insurance of persona shall not be deemed to be a contract for compensation. The amount insured maybe freely fixed and shall be due regardless of the damage suffered by the ii1sured person.

Art. 690. – Substitution not possible.

    Notwithstanding any provision to the contrary, the insured who has paid the agreed amount may not substitute himself for the subscriber or beneficiary for the purpose of claiming against third parties who caused  the damage.

Section 2. Life insurance

Art. 691. – Definition.
A life insurance is a contract whereby the insurer undertakes against the payment of one or more premiums to pay to the subscriber or to the  beneficiary a specified sum on certain conditions dependent upon the life or death of the subscriber or third party insured.

Art. 692. – Life insurance.

1.    The insurer who enters into a life insurance undertakes to pay a specified capital or life interest provided the insured person is alive at a date fixed in the policy.
2.    Tile insurer who enters into an insurance for the event of death undertakes to pay, on the death of the insured person a specified capital or life interest to those having rights from the insured person or to the beneficiary named in the policy.
3.    A combined policy may be made where the insurer undertakes to pay both under sub-art. (1) and sub-art. (2).

Art. 693. – Life insurance made by third party.

    An insurance policy for the event of death may be made by a third party. Such policy shall be of no effect unless the insured person agrees in writing and indicates the amount insured. Where the insured person is married, the consent of his spouse shall be required.

Art. 694. – Incapable person insured.
An insurance policy made for the event of the death of an incapable  person shall be of no effect notwithstanding that the incapable person or his legal representative agreed to the insurance. The policy may be cancelled on the application of any interested party and all premiums paid shall be refunded.

Art. 695. – Particulars in life insurance policy.

    In addition to the particulars required under Art. 658, a life insurance  policy shall show:
a.    the name, surname and the date of birth of the insured person;
b.    the name and surname of the beneficiary, if he is known;,
c.    the occurrence on which the payment of the agreed amount depends;
d.    the manner to calculating any reduction in the’ value of the Policy or its redemption value.

Art. 696. – Policy to order.

    Where the policy is to order, the endorsement of the policy shall be of no effect unless it is dated and shows the name of the beneficiary.

Art. 697. – Pledge.

    A life insurance policy may be pledged by annexing a schedule to this  effect to the policy or by endorsing a policy to order or in accordance with Art. 2866 of the Civil Code.

Art. 698. – Insured person to agree to assignment or pledge.

    The assignment, endorsement or pledge of the policy or the changing of the beneficiary named in the policy shall be of no effect unless the insured person agrees in writing.

Art. 699. – Suicide.

1.    Notwithstanding any provision to the contrary, an insurance policy for the event of death shall be of no effect where the insured person knowingly commits suicide. The insurer shall establish that suicide was committed knowingly.
2.    The policy shall be effective where the beneficiary can show that suicide was not committed knowingly.

Art. 700. – Murder of beneficiary.

    An insurance policy for the event of death shall be of no effect where the beneficiary intentionally kills the insured person and is convicted thereof by a criminal court.

Art. 701. – Beneficiary of insurance policy.

1.    An insurance policy for the event of death may be made to the benefit of specified beneficiaries.
2.    The following persons shall be deemed to be specified beneficiaries notwithstanding that they are not mentioned by name:
a.    the subscriber’s spouse, even where the marriage took place after the policy was entered into;
b.    the subscriber’s children, whether or not horn at the time when the policy is entered into.
3.    Where the beneficiary is not specified in the policy or the beneficiary specified in the policy does not agree, the subscriber may name a  beneficiary or substitute a beneficiary for another by will, schedule or endorsement.

Art. 702. – Beneficiary must be alive.

    Unless otherwise agreed, the benefit shall be deemed to be payable only on the condition that the beneficiary be alive on the day when the capital or life interest is to be paid.

Art. 703. – Agreement of beneficiary.

1.    The allocation of the benefit of a policy to a specified beneficiary may not be revoked after the beneficiary has agreed to the policy.
2.    The allocation of the benefit of a policy to a specified beneficiary may be revoked until such time as the beneficiary has agreed to the policy.

Art. 704. – Effect on insurer.

    The agreement of the beneficiary or the revocation of the beneficiary may not be pleaded against the insurer unless he was aware thereof.

Art. 705. – Beneficiary not specified.

    Where no beneficiary has been specified or he has been revoked or is not alive, the capital to be paid by the insurer shall be paid into the subscriber’s estate.

Art. 706. – Rights of beneficiary.

1.    The beneficiary may claim directly against the insurer.
2.    The sums to he paid to a specified beneficiary shall not form part of the insured person’s estate. The beneficiary shall be deemed to be entitled thereto as from the day when the policy was entered into, notwithstanding that he agreed to the policy after the death of the insured person.
3.    The sums to be paid to the subscriber’s spouse shall be regarded as the personal property of that spouse.

Art. 707. – No refund.

    The sums paid to the beneficiary shall not have to be refunded to the inheritance.

Art. 708. – Rights of creditors.

1.    The creditors of the insured person have no right on the sums to he paid to the beneficiary.
2.    The provisions of Art. 1029 (a) of this Code shall not apply where the insured person is declared bankrupt.

Art. 709. – Premiums not paid.

1.    The insurer may not bring an action for the payment of premiums due in respect of a life insurance.
2.    If a premium has not been paid at the due date on a policy on which less than three annual premiums have been paid, the insurer may demand payment. If payment is not made within one month from the date of the demand, the insurer may terminate the policy. This period may not be shortened in the policy.
3.     If a premium has not been paid at the due date on a policy on which at least three annual premiums have been paid and payment is not made within one month from the date of a demand for payment, the policy shall not lapse. The insurer may issue a paid up policy or otherwise reduce the capital or life interest of the policy according to regulations made under Art. 656.

Art. 710. – Redeeming.

1.    Notwithstanding any provision to the contrary, the insured person may, at any time after three annual premiums have been paid, ask to redeem an insurance policy made for the event of his death.
2.    The manner of calculating the price of redeeming shall be specified in the policy according to regulations made under Art. 656.
3.    The provisions of this Article shall not apply to provisional insurance policies for the event of death.

Section 3. Insurance against accidents and illness

Art. 711. – Risks insured.
1.    An insurance policy against accidents is a contract whereby the insurer undertakes to pay a specified sum to the insured person where the insured person is the victim of an accident during the period specified in the policy, or to the beneficiary named in the policy, where the insured person dies.
2.    The insurer may limit his guarantee to specified accidents or specified consequences of an accident.
3.    Accident includes any bodily injury arising out of unexpected extraneous occurrences;
4.    The insurer may insure against illness.

Art. 712. – Provisions relating to life insurance not applicable.

    The provisions of Section 2 of this Chapter relating to life insurance shall  not apply to insurance against accidents or illness.