An insurance contract is a contract under which, in return for payment of a fixed or variable premium, one party, the insurer, undertakes to provide the cover stipulated in the contract to another party, the policyholder, in the event of the occurrence of an uncertain event which it is in the interest of the insured party or the beneficiary, as the case may be, not to occur.
Two essential elements emerge from this definition:
The notion of "insurer"
An insurer is any person or company which, as a contracting party, offers to issue an insurance contract or contracts, irrespective of that person's professional qualification and irrespective of whether or not actuarial techniques are applied when the contract is taken out.
The term "insurance company" is reserved for companies which are subject to prudential supervision (financial oversight) or which, due to their small size, are exempt from such supervision. A Belgian insurance company or one from the EEA (European Economic Area) is an insurance company whose head office is established in Belgium or in an EEA Member State and which obtained an authorisation to conduct insurance-related activities. To check whether a company actually has the said authorisation, visit the website of the National Bank of Belgium.
Insurance contracts which are concluded by an insurer not authorised by law to conduct insurance-related activities in Belgium are invalid. However, the insurer is obliged to fulfil the obligations in the contract if the policyholder took out the insurance in good faith.
The notion of "uncertain event"
This notion refers to an uncertain, possible and future event that may occur beyond the control of the policyholder, the insured party or the beneficiary. Future events that are certain but for which the timing is uncertain also fall into this category (e.g., deaths).
This definition implies:
- that it is impossible to take out insurance for an event that has already taken place;
- that there must be a risk of the event occurring;
- that the occurrence of the event cannot depend entirely on the will of the policyholder, the insured party or the beneficiary. In other words, there has to be a certain amount of chance.
If one of these elements is missing, the event cannot be insured.