As is a general attribute of the commercial contracts, the insurance contract is a subject to frequent changes. Trade is a branch of economy in which everything happens quickly, including the changes. Bearing that in mind, it is not surprising that the commercial contracts are often changed and adapted to new conditions of business and trade, especially to new technologies.
From the beginning of human civilization, throughout history, people have encountered various dangers and adversities, such as accidents, destruction of property, loss of expected income, bodily injuries etc. What has always been in people’s nature is a risk aversion. From risk aversion, a need, but also a necessity, to protect people as much as possible from any danger, was born. Today, insurance no longer has a preventive character, but a protective one.
What definitely separates insurance from any other contract is a presence of risk. A risk is any danger from which one wants to protect oneself. To be the subject of an insurance contract, the risk must be possible, uncertain, as well as independent of the sole will of any person associated with the said contract. Precisely because of these features, insurance is one of the rare aleatory contracts.
An insurance contract is a contract in which the insured is obliged to pay the insurance company a premium in a certain amount, and the insurance company (or the insurer) is obliged to indemnify the insured if the insured, i.e. triggering, event occurs. Depending on the specific type of the insurance, the risks, the insured event, as well as premium amount and the indemnification amount differ.
First and foremost, we will take a closer look at life insurance.
A specific characteristic of life insurance, compared to the other types of insurance policies, is that the insured event can be the death of the policyholder (or the another person) or the policyholder’s becoming of old age. This is precisely why life insurance is almost always a tripartite legal relationship, in which the policyholder and the insurance beneficiary are different people. Now, question arises why would one conclude such a contract? If the risk occurs (in this case - the death), one can protect someone close to oneself (in this case, the insurance beneficiary) by obtaining financial resources from the insurance company. What is interesting is that in the second type of the life insurance policy (the policyholder’s becoming of old age), we are actually talking about a type of investment, which also has a protective character. Due to the long-term nature of this type of insurance, it is extremely important for the country’s economy.
As previously stated, the insurance contract has undergone changes over time due to the influence of the development of the economy and new technologies, so now we will take a closer look at some newly invented types of the insurance.
Business insurance is of great importance today, for companies are subjects to much larger amounts of damage and losses, and any disruption of the normal functioning of the business, no matter how small, can lead to far greater consequences. Business insurance helps protect business owners from business risks and unexpected losses resulting in property damage, accidents, bodily injuries of the employees etc.
In recent decades, a new type of insurance has emerged, under the influence of the development of modern technologies. Let's first give an example: in the year 2011, hackers breached the Sony PlayStation Network, exposing the personal information of 77 million user accounts. Sony incurred more than $171 million in costs related to this cyber-attack. These costs could have been covered by a cyber-insurance policy, but Sony PlayStation did not have one.
A risk that is perhaps the most dangerous to the businesses today, even if it doesn’t seem so, is a damage related to the information technologies. The consequences of the occurrence of this risk can be very far-reaching for a business, and even fatal. Today everyone in business uses information technologies. Cyber insurance can help with:
‣ the return of the lost data;
‣ the restoration of software;
‣ the return of seized funds;
‣ the protection in case of breach of the confidentiality and privacy;
‣ the notifications in case some of the risks are happening, etc. (of course depending on the offer of the insurance company).
What is important to know is that such insurance policies are mostly short-term contracted, for the security in the I.T. industry changes quickly, sometimes even monthly, so it is necessary to change the conditions of the insurance policy often.
To summarize, insurance matter is complex and ever-evolving area of law, which is why it is best to stay well informed and why we recommend consulting a legal professional. Don’t be like Sony, be aware.
*The information in this document does not represent legal advice and is provided for general informational purposes only.
**Partner, Senior Associate, Associate and/or Junior Associate refers to Independent Attorney at Law in cooperation with IVVK Lawyers.
Contact:
Nikola Komnenović, Partner at IVVK in cooperation with LexQuire
E-mail: nikola.komnenovic@ivvk.rs
Marija Tesla, Junior Associate at IVVK in cooperation with LexQuire
E-mail: marija.tesla@ivvk.rs
16/12/2023
