A Taste for Risk – Chronicles of Luxembourg Insurance Law

The key players

Insurer

“An undertaking authorised by the competent authority which, in exchange for a premium, undertakes to provide a benefit or pay compensation if the risk covered by the contract materialises.”

Insured

In property and casualty insurance:

“The person covered by the insurance against financial loss.”

In personal insurance:

“The person whose life, physical integrity or personal circumstances are subject to the occurrence of the insured event.”

Examples:

• Named driver under a motor insurance policy
• Employee covered by accident insurance
• Person whose life is insured under a life insurance policy

Policyholder, also referred to as the “Subscriber”

“The person who enters into the insurance contract.”

Examples:

• Company taking out public liability insurance
• Employer taking out occupational accident insurance
• Company/director/officer taking out D&O insurance
• Doctor taking out professional liability insurance

Beneficiary

“The person in whose favour insurance benefits are stipulated.”

Examples:

• Spouse designated as beneficiary under a life insurance policy
• Child entitled to receive a death benefit
• Third party benefiting from a contractual guarantee
• Lender, generally a credit institution, under outstanding balance insurance
• Studio/production company in the event of filming delays covered by film insurance

Injured party

“The victim of damage caused by the insured under liability insurance.”

Examples:

• Customer injured in a shop
• Neighbour suffering water damage
• Third party suffering loss as a result of professional negligence
• Client of an auction house where a painting was damaged due to improper packaging
• Company suffering losses because of a defective electronic component that brings its production line to a halt

Key concepts

Insurance contract

“A contract under which, in consideration for the payment of a fixed or variable premium, one party, the insurer, undertakes towards another party, the policyholder, to provide the benefit stipulated in the contract where:

• In property and casualty insurance, an uncertain event occurs which the insured has an interest in avoiding;
• In personal insurance, an uncertain event occurs affecting the life, physical integrity or family circumstances of the insured.

A nominative contract based on capitalisation techniques and containing a beneficiary designation clause is also considered an insurance contract.”

Examples:

• Home insurance
• Professional liability insurance
• Life insurance with a designated beneficiary
• Motor insurance

Risk

“The future and uncertain event against which the insured has sought protection and upon which the insurer’s obligation to provide the agreed benefit depends.”

Examples:

• Fire
• Personal injury
• Death
• Civil liability
• Theft

 

➡️ For any questions regarding insurance law, please contact Benjamin Nicolas.