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When can an insured party challenge their insurance claim settlement?

An insurance agreement binds the insurer to provide the insured party an insurance indemnity upon the occurrence of the insured event. However, in practice, insurers often pay out only part of the insurance indemnity, or in some cases determine a zero-claim settlement. Another problem faced by the insured party may be the insurer’s disregard of the insured party’s notices and complaints, or unreasonably delayed communication with the insured party. How can an insured party defend themselves if they are not satisfied with the way their insured events were settled?  

The options to challenge an insurance claim settlement can vary based the type of insurance in question, and also on whether or not the insured party is considered a consumer.

Filing a direct complaint to the insurer

If an insured party is not satisfied with the way their insured event was settled by the insurer, they should first complain directly to the insurer. In the complaint addressed to the insurer, it is advisable to convey disagreement with the settlement of the insured event, and demand a reassessment. If the insurer does not respond to, or rejects, the complaint, it is advisable to seek the assistance of a lawyer specialising in insurance law, and communicate further through them. This approach usually results in the dispute being settled during pre-litigation process.

Filing a proposal for commencing extrajudicial settlement of a consumer dispute with the insurer

This option is possible if the insured is in the position of a “consumer”. A “consumer” is any individual who, outside their trade, business, or profession, deals with the insurer. The purpose of an extrajudicial dispute settlement is to reconcile the dispute between the parties outside a judicial trial. Therefore, to commence an extrajudicial settlement, it is necessary that legal action has not been filed in the case, or that the parties to the dispute have not already agreed upon a reconciliation between themselves. Another important requirement is that the insured party has already tried to claim their rights directly with the insurer.

Filing a proposal for commencing extrajudicial settlement is free of charge, and each party bears its own costs. It can be done within one year from the date on which the insured party tried to claim their rights directly with the insurer. Extrajudicial settlement of a dispute generally ends within 90 days from its initiation.

The authority that can be approached by the insured party for an extrajudicial settlement depends on whether the insurance in question is considered life insurance, or an insurance other than life insurance.

Life insurance is an insurance of an individual with the insured event being their death, reaching a certain age, or other conditions regarding their personal status change. However, sickness insurance and insurance for injury do not belong in this category. Therefore, if the insurance in question is life insurance, the authority empowered to settle an extrajudicial dispute is the Office of the Financial Arbitrator of the Czech Republic.