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Insurers’ Liability for Third Party Risks: New Ordinance Comes Into Effect
The government has introduced new regulations aimed at ensuring that insurance companies are held liable for third-party risks. The ordinance came into effect today and requires insurers to cover certain liabilities while providing clarity on the scope of policies covering such risks.
Certificate of Insurance: Key to New Regulations
Under the new ordinance, a certificate of insurance is a crucial document that must be delivered by the insurer to the person who has taken out the policy. This certificate serves as proof that the policyholder has complied with the requirements of the ordinance and provides assurance that the insurer will meet its obligations.
Conditions in Policies: No Longer Valid
The new regulations render certain conditions in policies invalid, including:
- Conditions that restrict insurance coverage by reference to factors such as age, physical or mental condition, vehicle condition, or time of use
- Any other conditions that may be deemed unreasonable or unfair
Insurers Cannot Avoid Liability
In a significant move, the ordinance prevents insurers from avoiding liability for third-party risks. If a judgment is obtained against an insured person in respect of a liability covered by the policy, the insurer must pay out any sum payable under the judgment, including costs and interest.
Sums Payable by Insurers: Recoverable from Policyholders
However, it’s worth noting that sums paid by insurers will be recoverable from the policyholder. This means that if an insurer pays out a claim in respect of a liability covered by the policy, it can subsequently seek reimbursement from the policyholder.
New Regulations Aim to Protect the Public
The new ordinance is designed to protect the public by ensuring that insurance companies are held accountable for third-party risks. By providing clarity on the scope of policies and the liabilities they cover, the government hopes to promote greater transparency and fairness in the insurance industry.
In conclusion, the introduction of this new ordinance marks a significant shift in the way insurance companies approach third-party risks. As the regulations come into effect, it’s essential for policyholders to understand their rights and obligations under the new rules.