Policy conditions that were known to the Insurance Agent are not deemed to be known to the Assured
Pursuant to the Israeli Insurance Contract Law -1981 the insurance agent is presumed to be the agent of the insurer in respect of various matters. This presumption may be refuted by written instructions from the assured, appointing the insurance agent to act on his behalf.
These provisions raise numerous difficulties and continue to be a focus of litigation.
One such case is C.A. 2626/01 Clal Insurance Company Ltd. V. Mussa Ally. In this case, the policy included specific warranties and provisions in respect of required protective measures, which the assured did not comply with. Since cover under the policy was subject to compliance with these measures, the insurer repudiated liability.
The assured alleged that he had not received a copy of the policy, and therefore was unaware of the protective measures requirements. The insurance agent, who was a relative of the assured, had received the policy on his behalf.
In the proposal form, the assured appointed the insurance agent to act as his agent. The insurer relied on this appointment and on the family relationship between the assured and the insurance agent (who had received the policy) in its argument that the agent`s knowledge should be imputed to the assured.
The Tel-Aviv District Court rejected the insurer`s argument, and ruled that it had failed to prove that the assured was aware of the policy conditions. The Insurance Contract Law – 1981, is a pro-consumer law, whose objective is to protect assureds. The burden of proof that the assured fully comprehended his waiver of the legal presumption that the insurance agent is agent of the insurer lies upon the insurer. In the absence of clear cut proof that the assured fully understood the meaning of the waiver and intended to appoint an agent, the legal presumption will prevail, and the agent is deemed to have acted as agent of the insurer.
Furthermore, the insurer failed to prove that the policy provisions regarding the protective measures requirements were brought to the assured`s attention. In view of the above, the court ruled that the assured is entitled to payment of insurance benefits.
This case emphasizes the necessity of implementing procedures to verify that the policy and any survey reports which include safety requirements are duly delivered to the assured. Their receipt should be confirmed by the assured`s signature. Many disputes can be avoided by receipt of such written confirmation signed by the assured.