Insurance contracts can be classified in different ways, one of which divides them into insurance against damages and personal insurance.
Insurance against damages
This type of insurance pursues the strict indemnity of the damage suffered, the insurer is limited to providing the value that replaces the loss suffered by the insured. The amount is not known until the damage occurs, so that, at the time of conclusion of the insurance contract, no amount is fixed, but rather bases and methods to be able to proceed to the calculation after the occurrence of the damage. The insurance contracts against damages are as follows:
Legal defense insurance
This is the one whereby the insurer undertakes to cover the expenses that the insured may incur due to his intervention in an administrative, judicial or arbitration proceeding, as well as to provide him with legal assistance services (judicial and extrajudicial) derived from the insurance coverage. This type of insurance allows the insured to protect himself against various daily contingencies in which he may require the technical assistance of a solicitor and lawyer, and the insurer must pay the expenses required by the technical assistance.
According to the doctrine, the insured’s interest is the integrity of his patrimony against possible expenses derived from the legal defense and the risk will be integrated by the set of actions that may affect such patrimony”. It is an autonomous insurance contract that must be differentiated from others, such as the case of legal defense included in civil liability insurance. In legal systems, it allows the free choice of attorney and lawyer for the representation and defense in any kind of proceeding, the latter not acting under instructions from the insurer. In this line the jurisprudence has been pronounced and even the protection has been extended to the family unit as insured in the legal defense).
Land transport insurance
The inland transport insurance contract is a typical contract whose elements are consensuality, bilaterality, onerousness, randomness and successive performance. This insurance may be contracted not only by the owner of the goods or of the vehicle transporting them, but also by all those who are responsible for their preservation, such as the commission agent or the transport agency. Additionally, it may be contracted per trip or for a specific period of time. Normatively it is understood that the insurance coverage begins from the moment the goods are delivered to the carrier for transportation (at the point of departure of the insured trip), that is to say that the liability of the insurer now begins at the moment the carrier receives or should have received the goods subject of the insurance, and ends when the goods are delivered to the consignee at the point of destination.
However, when different means are used for the transportation of the goods (land, air, sea or river), and the exact time of loss cannot be determined, the law establishes that the rules of the land transportation insurance shall apply if the trip by this means constitutes the most important part of the loss. If, on the contrary, the land transportation is accessory to another means of transportation, the rules of the predominant means of transportation shall apply. With respect to the insurable risk, this insurance covers all risks inherent to transportation. However, it is important to bear in mind that the insurer is not obliged to respond if the merchandise suffers any deterioration caused by the simple passage of time, nor for the risks expressly excluded at the time of contracting the insurance.
In this type of insurance the insurer is obliged to indemnify the insured for the damage caused by fire to the insured object. The insurance coverage will be extended to the objects described in the policy. When the insured goods are objects of art, jewelry and precious metals, securities, money and documents of any kind, an express inclusion is required for coverage. It is understood to be covered under the fire insurance also those damages caused by consequences associated to fire, such as damages derived from heat, smoke, steam, etc.
In this type of insurance, the insurer covers the damages derived from the illegitimate subtraction, by third parties, of the things insured in the contract. The second paragraph of Article 50 establishes that “the coverage includes the damage caused by the commission of the crime in any of its forms.
Insurance for loss of profits
In this insurance contract, the insurer covers the loss of the economic return that could have been achieved in an act or activity had the loss described in the contract not occurred. Frustrated expectations are covered, but only when this situation has arisen as a consequence of the events determined in the contract. In the event that the insurer contracts a loss of profit insurance with one insurer and another damage insurance with another insurer, it must notify both insurers of such situation, in order to avoid that, for the same object, cause and temporality in the coverage, two indemnities are collected, thus producing an unjust enrichment.
The insurer covers property damage arising from the debtor’s failure to comply with an obligation. This is an insurance policy involving three persons: the insurer, the policyholder and possible defaulter, who is the person who takes out the insurance policy, and the insured, who is the person entitled to indemnity. It is also known as a guarantee insurance, since its purpose is to establish a guarantee that obligations will be fulfilled.
In this insurance the insured risk is insolvency. Therefore, the insurer covers the damages suffered and derived from the definitive insolvency of the debtors and that as a consequence of this the non-payment of their credits is produced. Under this insurance, the insurer would indemnify the insured with a percentage, previously established in the policy, of the amount of the unpaid credit, plus the recovery expenses and other expressly agreed damages.
Civil Liability Insurance
Insurance whereby the insurer undertakes to cover the risk of the insured party’s obligation to indemnify a third party for damages caused, when the insured party is civilly liable for such damages, due to an event foreseen in the contract.
Personal insurance covers risks that may affect the existence, integrity or health of the insured. Unlike damage insurance, in this case they do not usually compensate the damage suffered by the insured, but tend to have a forecasting and savings purpose. In this type of insurance, the amount of the indemnity is previously agreed in the insurance contract. The most common personal insurance policies regulated are as follows:
By means of this insurance the insurer undertakes to pay the beneficiary a capital sum, income or other agreed benefits in the event of the death or survival of the insured, or both together. Life insurance may be on the life of the policyholder or on the life of a third party, although in the case of the latter his consent is required. The policyholder may designate a beneficiary and if no beneficiary is stipulated the capital derived from the insurance shall be included in the policyholder’s estate.
The insurer is obliged to cover bodily injuries deriving from a sudden violent cause, external and alien to the intentionality of the insured, resulting in temporary or permanent disability or death. This insurance is considered a hybrid in that it is an insurance of persons, since the risk is the protection of the physical integrity of the person, but it may act as a damage insurance when the insurance covers the costs of hospitalization, rehabilitation, transfer etc.
Sickness and health care
The risk in this type of contract is that the insured may contract illnesses. Therefore, under this insurance, the insurer would cover the costs of medical and pharmaceutical assistance, when we are dealing with a health insurance, or in the case of health care insurance, the insurer assumes the direct provision of medical and surgical services to the insured.
The insurer is obliged to comply with the benefit established in the contract, when a situation of dependency arises, with the purpose of attending to, totally or partially and directly or indirectly, the negative consequences derived for the insured when he/she is in such a situation. The law often refers us to the regulations for the promotion of personal autonomy and care for dependent persons in order to observe in which situations we find ourselves before a case of dependency. In this case the risk would be the lack of autonomy, the loss of independence. When we are faced with cases of dependency, in the sense that the public sector guarantees basic coverage and the private sector, as in the case of this insurance, can complement and improve the benefits offered by the public sector.
In this case the insurer undertakes to provide the funeral services agreed in the insurance contract in the event of the death of the insured. When an amount is agreed in the policy, and the expenses of the service provided are lower than this, the difference will correspond to the policyholder and in the event of his death, to his heirs.
The law usually establishes certain insurances as mandatory. Examples of insurance required by law are as follows:
- Insurance for dogs considered dangerous;
- Sports insurance: Covers sports activities, training and competitions carried out under the supervision and/or authorization of the institution for which the coverage was contracted and during the term indicated in the policy;
- Hunting insurance: The minimum coverage you can get is the hunter’s civil liability policy that covers involuntary damages that may be caused to others during the hunting activity.
- Diving insurance: Most of them include rehabilitation, surgical assistance, medication, expenses as well as prosthesis or similar. Some policies establish a maximum depth to which the insured may descend.
- Bicycle insurance: non-mandatory sports insurance; civil liability insurance; to obtain it, it is necessary to become a member of the entity and register the bicycle;
- Ski insurance: non-mandatory sports insurance; minimum civil liability insurance;
- Quad bike insurance: a quad bike requires compulsory civil liability insurance to circulate;
- Property damage or surety insurance: the public authorities understand that the dangerousness of certain activities is sufficient to oblige those who carry them out to take out insurance to protect third parties from the damage that may be caused.The public authorities understand that the dangerousness of certain activities is sufficient to oblige those who carry them out to take out insurance to protect third parties from the damage that may be caused.
Other contracts may be bound by a prior contract. It is very common in a mortgage to have to insure the mortgaged property in favor of the creditor..
Some less frequent examples are:
- Securing a part of the human body: legs, chest, nose, etc.
- One-day vehicle insurance. For example, old vehicles that are driven one or a few days a year.
- Real estate title insurance. Also called title insurance, it is a type of insurance created in the United States to protect all types of real estate purchases and sales or liens on real estate.