Insurance Regulation: Determining fair vehicle value for comprehensive policy

The Insurance Regulation Unit issued a decision regarding the rules for issuing comprehensive vehicle insurance policies, which was published in the official gazette, “Kuwait Today,” yesterday. The decision obligates the insurance company to determine the fair market value of the vehicle at the time of issuance using one of the documented valuation methods, such as the purchase invoice, the average of three prices from experienced parties, or a letter from the authorized dealer. The premium is calculated based on this value.

The company is not permitted, after issuing the policy or upon the occurrence of an accident, to reassess the vehicle’s value or invoke its market value at the time of the accident if doing so would reduce the compensation, unless fraud, misrepresentation, or a fundamental error is proven. The decision clarified that any ambiguity in the policy’s provisions shall be interpreted in favor of the insured, provided the ambiguity arises from the drafting or presentation of the policy.

The company is required to physically inspect the vehicle, photograph it, and document its condition in a report prior to issuance. It may not rely on damages recorded in such a report to reject a subsequent claim or reduce compensation, unless these damages are explicitly excluded in the policy.

The decision prohibits applying any deductible amount, percentage, or fee not explicitly stated in the policy schedule. It also forbids charging the insured for transportation or towing costs unless it is proven that the delay resulted from the insured’s actions and that the insured was duly notified.

The company must provide the claimant with a receipt confirming the submission of the claim, including the claim number and date, and must notify the insured of a reasoned decision in the event of a total or partial rejection of the claim. A vehicle is considered a total loss only in cases of technical total loss or economic partial loss. In the case of a single-vehicle accident resulting in a total loss, the company shall apply the same deductible percentage to the value of the salvage or the proceeds from its disposal.

If the company cancels the policy, the remaining premium for the unused days shall be refunded without deducting compensation, provided the cancellation is justified. Coverage remains in effect during the notice period.

The decision prohibits issuing policies without a Quick Response (QR) code, 90 days after the publication of this decision. The code must allow for verification of the policy’s data and status. The issuance of fleet policies is permitted, provided the number of vehicles is at least three. The Unit is authorized to compel a non-compliant company to modify the policy form, suspend its use, or refund amounts collected without justification.