Life Insurance and Term for Rejection of Claim

In the case of “Bizarro Milton Luis c/ Caja de Seguros de Vida s/ ordinario” the plaintiff demanded that La Caja Seguros de Vida S.A. pay the disability benefits arising both from a mandatory life insurance policy taken out by the plaintiff’s employer and from a voluntary life policy. The plaintiff also claimed an indemnification for the moral damage caused by the insurer’s breach. The plaintiff alleged that, after he reported his disability to the insurer, the latter remained silent for more than 30 days, which -pursuant to section 56 of the Insurance Contract Law- constitutes a tacit acceptance of the loss by the insurer.

The insurance company requested that the claim be rejected. With respect to the claim arising from the mandatory insurance policy, it argued that the plaintiff had not allowed the insurer’s practitioners to examine him to confirm the alleged disability; and with respect to the claim arising from the voluntary life policy, the insurer argued that the limitation period had expired.

The first instance court held that the limitation period had not expired and rejected the claim. The judge held that section 56 of the Insurance Contract Law is not applicable to a life insurance policy and that the plaintiff’s disability had not been proved by an expert witness. The plaintiff appealed.

Tribunal E of the Commercial Court of Appeals shared the opinion of Tribunal C (please refer to “Thirty days to repudiate a loss – Life Insurance in US dollars – Emergency regulations” published in Marval News # 27, April 30, 2004) and held that section 56 of the Insurance Contract Law is applicable to life insurance contracts.

Under section 56, an insurer must take a decision as to the right of the insured to be indemnified within 30 days of the insurer’s receiving notice of the loss. If the insurer does not formally reject the claim within 30 days, the law will consider that the loss has been accepted by the insurer. Notwithstanding, some authors are of the opinion that such tacit acceptance only applies to non-life insurance.

The Commercial Court of Appeals held that section 56 is applicable to life insurance because that section is included within Chapter I of the Insurance Contract Law (General Provisions) and is therefore applicable to all specific insurance covers (including mandatory life insurance because, although based on an administrative act, private law applies with subsidiary effect to such insurance).

The Commercial Court of Appeals found that the disability had been proved by a medical report filed by the plaintiff along with his claim, by the report of an accountancy expert and by the application for the disability benefit submitted by the plaintiff’s employer to the insurer.

With respect to the mandatory life insurance, the Commercial Court of Appeals held that the insurer had not shown that it acted in a timely manner in requesting the insured to be examined by the insurer’s practitioners. With respect to the voluntary life insurance, although the insurer rejected the loss because the limitation period had expired, the Commercial Court of Appeals found that the insurer had failed to prove such rejection.