2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
The conditions of modern insurance allow you to apply various ways to cover possible losses. One of the methods used is insurance of the past tense - the so-called insurance in the retroactive period. This type of compensation is used in contracts concluded between legal entities in various areas of economic activity.
What is a "retroactive period"?
Retroactive period is the period of validity of the insurance policy, agreed upon by both parties. The insurance period begins on the dates preceding the date of conclusion of the insurance contract and ends on the date the policy is issued. All insured events that occur during this period are covered from the amount of insurance compensation.
Typical clauses in an insurance contract
In insurance contracts, the retroactive period of insurance is a time factor that determines the payment of compensation for an event that occurred before the signing of the contract.
There are two types of such period:
- Annual contract base. In this case, the reporting date of the insurance period begins from the moment the organization is allowed to perform work. The damage covered in the event of an insured event must be caused not earlier than three years beforeinsurance period.
- Design base of the contract. The retroactive period is counted from the start of work.
Grievance Handling
The priority direction of implementation (retroactive insurance) is construction, insurance of financial risks.
The essence of compensation is to compensate for the losses that have been identified on the work already completed. True, this rule is valid only if, at the time of issuing the insurance policy, the beneficiary did not know about the existing miscalculations and should not have known (did not receive letters, orders or memos upon the discovery of deficiencies).
The issue of including the past period in the insurance coverage has been repeatedly considered by arbitration courts. But the basic rule says that a retroactive period can be considered as such only if the parties agree. Even if the parties assume the existence of such a clause, but do not include it in the insurance conditions, damages may be denied.
If the insured person knew about the miscalculations, nevertheless bought the policy, then such actions are regarded as fraud.
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