Chapter 15 - Contract of Insurance
Chapter 15 - Contract of Insurance
An insurer authorized to do business in American Samoa may only write classes of insurance authorized by this chapter and by the insurer’s certificate of authority.
Fire insurance includes insurance upon buildings and other property against loss or damage by fire, lightning, windstorms, cyclones, tornadoes, typhoons, hail or earthquakes, water from the breakage or leakage of sprinkler pumps or other apparatus erected for extinguishing fires, and water pipes; and against loss or damage arising from the prevention or suspension of rent or use and occupation of any building, plant, or manufacturing establishment, due to the hazard or peril against which the insurance is carried.
Marine insurance includes insurance upon ocean and inland risks, and transportation, but not including any other casualty insurance as hereinafter provided.
Life insurance includes insurance on all forms of life, endowments, and annuities, but does not include health, accident, or sickness insurance or any other casualty insurance as hereinafter provided.
(a) Accident insurance and sickness or health insurance includes insurance against injury, disablement, or death resulting from travel or general accident and against disablement resulting from sickness, and every insurance appertaining thereto.
(b) Liability insurance includes all insurance against loss or damage resulting from accident to, or injury, fatal or nonfatal, suffered by, any person, and for which the insurer is liable.
Fidelity and surety insurance includes all guaranteeing of persons holding places of public trust, and of the performance of contracts other than insurance policies. It also includes the execution of all bonds, undertakings and contracts of suretyship.
Motor vehicle insurance includes all insurance on motor or motor driven vehicles, except those operating on water or on rails, against loss or damage to or loss of use of the vehicle or its tools, appliances or equipment, against local liability for loss or damage to persons or property resulting through the operation of the vehicle caused by fire, self-ignition, explosion, theft, collision, or other insurance hazards, including hazards incident to transporting the vehicle on land or water.
Title insurance includes insurance or guaranty of title to real or personal property or any interest or encumbrance thereon, or of information relative to real property, against loss by reason of defective titles, encumbrances, or adverse claims of title, or otherwise.
Workmen’s compensation insurance includes insurance against loss from liability imposed by law upon employers to compensate employees and their dependents for injury sustained by employees arising out of and in the course or scope of their employment.
“Annuity” or “annuity policy” means any agreement to make periodic payments, whether fixed or variable in amount, where the making of all or some of the payments, or the amount of the payments, is dependent upon the continuance of human life, except payments made pursuant to the settlement provisions of a life insurance policy, and includes additional benefits operating to safeguard the policy from lapse or to provide a special surrender value or special benefit or annuity in the event of total and permanent disability of the annuitant.
“Mortgage insurance” means insurance against financial loss by reason of:
(1) nonpayment of principal, interest and other sums agreed to be paid under the terms of an obligation secured by a mortgage, deed, or trust, or other instrument constituting a lien or charge on real or personal property; or
(2) nonpayment of rent and other sums agreed to be paid under the terms of a written lease for the possession, use or occupancy of real property, such insurance also being referred to as “lease insurance”.
“Property insurance” means insurance on real or personal property of every kind and of every interest therein, whether on land, water or in the air, against loss or damage from any and all hazards or causes, and against consequential loss from such loss or damage, other than non-contractual legal liability for loss or damage. “Property insurance” does not include title insurance.
“Miscellaneous insurance” includes insurance about any risk not included within or under any of the classes listed in 29.1502 through 29.1512 in which there is a proper subject for insurance, not prohibited by law or contrary to sound public policy.
Any person capable of making a contract may be an insurer, subject to the restrictions imposed by this part.
Except as provided in 29.1520 through 29.1527, any contingent or unknown event, whether past or future, which may damage any person having an insurable interest, or create a liability against him, may be insured against, subject to this title.
(a) Every interest in property, or any relation thereto, or any liability in respect thereto, of such a nature that a contemplated peril might directly damage the insured, is an insurable interest. A mere contingent or expectant interest in anything, not founded upon an actual right to or in the thing, nor upon any valid contract for it, is not insurable.
(b) Every person has an insurable interest in the life and health of:
(2) any person upon whom he depends wholly or in part for education or support;
(3) any person under a legal obligation to him for the payment of money or respecting property or services, or whose death or illness might delay or prevent performance;
(4) any person upon whose life any estate or interest vested in him depends.
(c) If the insured has no insurable interest, the contract is void.
Except in the case of property held by the insured as a carrier or depository, the measure of an insurable interest in property is the extent to which the insured might be damaged by loss of, or injury to, the property.
A carrier or depository of any kind has an insurable interest in a thing held by him as such to the extent of its value.
An interest in property insured must exist when the insurance takes effect and when the loss occurs, but need not exist in the meantime; and interest in the life or health of a person insured must exist when the insurance takes effect, but need not exist thereafter or when the loss occurs.
(a) Except in the cases herein specified, and in the cases of life and disability insurance, a change of interest in any part of a subject insured, unaccompanied by a corresponding change of interest in the insurance, suspends the insurance to an equivalent extent until the interest in the subject and the interest in the insurance are vested in the same person.
(b) A change of interest in a subject insured after the occurrence of an injury which results in a loss does not affect the right of the insured to indemnity for the loss.
(c) A change of interest in one or more of several distinct subjects separately insured by one policy does not avoid the insurance as to the others.
(d) A change of interest by will or succession, on the death of the insured, does not avoid insurance; and his interest in the insurance passes to the person taking his interest in the subject matter insured.
(e) In the case of partners, joint owners, or owners in common, who are jointly insured, a transfer of interest by one to another thereof does not avoid insurance even though it has been agreed that the insurance shall cease upon an alienation of the subject insured.
The mere transfer of subject matter insured does not transfer the insurance, but suspends it until the same person becomes the owner of both the insurance and the subject matter insured.
(a) Except where otherwise provided by law, no basic policy form, application form (where written application is required and is to be made a part of the policy), rider, endorsement or renewal certificate form, may be delivered or issued for delivery until the form has been filed with and is approved by the Commissioner. This section does not apply to:
(1) forms of unique character which are designed for, and used with respect to, insurance upon a particular risk or subject;
(2) forms issued at the request of a particular life or health insurance policy owner or certifi-cate holder and which relate to the manner of distribution of benefits or to the reservation of rights and benefits thereunder; or
(3) forms of group life or health insurance policies, or both, which have been agreed upon as a result of negotiations between the policyholder and the insurer.
(b) The Commissioner shall, within 30 days after the filing of any form, approve or disapprove the form. The Commissioner shall give written notice of his action to the insurer pro-posing to deliver the form, and when a form is disapproved, the notice shall show wherein the form does not comply with the law.
(c) The 30-day period referred to in subsection (b) may be extended by the Commissioner for an additional period not to exceed 30 days if he gives written notice within the first 30-day period to the insurer proposing to deliver the form that he needs the additional time for the consideration of the form.
(d) The Commissioner may at any time request an insurer to furnish him a copy of any form exempted under subsection (a).
The Commissioner shall disapprove any form requiring his approval:
(1) if he finds it does not comply with the law;
(2) if he finds it contains any provisions, including statement of premium, or has any label, description of its contents, title, heading, backing or other indication of its provisions, which is unintelligible, uncertain, ambiguous or abstruse, or likely to mislead a person to whom the policy is offered, delivered or issued;
(3) if, in his judgment, its use would be prejudicial to the interests of the insurer’s policy-holders;
(4) if he finds it contains provisions which are unjust, unfair, or inequitable;
(5) if he finds sales presentation material disapproved by him is being used with respect to the form; or
(6) if, with respect to forms subject to approval, he finds the benefits provided therein are not reasonable in relation to the premium charged.
The Commissioner may, at any time after a hearing held not less than 20 days after written notice to the insurer, withdraw his approval of any form on any ground set forth in 29.1531. The written notice of the hearing shall state the reason for the proposed withdrawal. No insurer may deliver any form after the effective date of the withdrawal, which shall be as the Commissioner may prescribe but not less than 30 days after the giving of notice of withdrawal.
(a) The written instrument in which a contract of insurance is set forth is the policy and it must contain the following information:
(1) the parties between whom the contract is made;
(2) a description of the property, life, or interest insured;
(3) the interest of the insured;
(4) the risk insured against;
(5) the period during which the insurance is to continue;
(6) either a statement of the premium or, if the insurance is of a character where the exact premium is only determinable upon the termination of the contract, a statement of the basis and rates upon which the final premium is to be determined and paid;
(7) the conditions and provisions pertaining to the insurance;
(8) the time when the insurance thereunder takes effect and the period during which the insurance is to continue.
(b) In addition, the policy may contain other provisions not inconsistent with the insurance law and which are:
(1) required to be inserted by the laws of the insurer’s domicile;
(2) necessary, on account of the manner in which the insurer is constituted or operated, in order to state the rights and obligations of the parties to the contract; or
(3) desired by the insured and neither prohibited by law nor in conflict with any provisions required to be included therein, and which are in each instance not less favorable in any respect to the insured or beneficiary.
(a) All policies issued on risks in American Samoa shall be signed and subscribed as follows:
(1) if the insurer is an admitted domestic insurer, each policy shall be signed and subscribed by 2 of the major officers of the insurer designated in its articles of incorporation or in its bylaws to do so;
(2) if the insurer is an admitted foreign insurer, it shall be signed and subscribed by 2 of the major officers of the insurer authorized to do so and in all cases it shall be countersigned by the insurer’s authorized resident general agent, or shall have attached thereto an appropriate countersignature endorsement signed by the resident general agent;
(3) if the insurer is an admitted alien insurer it shall be signed by its United States general manager or other person in charge of its United States business if it has such officials, or if it does not, by 2 of the major officers of the insurer authorized to do so, and in all cases or shall be countersigned by the insurer’s authorized resident general agent, or shall have attached thereto an appropriate countersignature endorsement signed by the resident general agent.
(b) Countersignatures by an authorized resident general agent of the insurer originating a contract of insurance participated in by other insurers as cosureties or coindemnitors shall satisfy all the countersignature requirements in respect of the contract of insurance.
(c) The provisions of this section relating to countersignature by an insurer’s authorized general agent shall not apply to:
(1) any contract of insurance covering any vessel or aircraft used in interstate or foreign commerce, or covering any liability or other risks incident to the ownership, maintenance, or operation thereof;
(2) any contract of reinsurance between any insurance companies or other insurers;
(3) any contract of insurance covering any property in interstate or foreign commerce, or any liability or risks incident thereto.
When the name of the person intended to be insured is specified in a policy, it can be applied only to his own interest.
A policy may be so framed that it will insure to the benefit of whosoever, during the con-tinuance of the risk, becomes the owner of the interest insured.
On any policy of liability insurance, the injured person or his heirs or representatives has a right of direct action against the insurer within the terms and limits of the policy, whether or not the policy of insurance sued upon was written or delivered in American Samoa, and whether or not the policy contains a provision forbidding direct action, provided that the cause of action arose in American Samoa. The action may be brought against the insurer alone, or against both the insured and insurer.
No policy of liability insurance may be issued or delivered in American Samoa unless it con-tains provisions to the effect that the insolvency or bankruptcy of the insured may not release the insurer from the payment of damages for injuries sustained or loss occasioned during the term of the policy, and that in case execution against the insured is returned unsatisfied in any action brought by the injured person or his heirs because of the insolvency or bankruptcy, an action may be maintained by the injured person or his heirs or representatives against the insurer within the terms and limits of the policy for the amount of the judgment, not exceeding the amount of the policy.
A policy is either an open policy, which is one wherein the value of the subject matter is not agreed upon but is left to be ascertained in case of loss, or a valued policy, which is one containing on its face an expressed agreement that the thing insured shall be valued at a specified sum. An open policy must not be written on real property for fire insurance or miscellaneous insurance.
(a) An insurer may not use a policy form in effecting insurance without first obtaining the Commissioner’s approval thereof as provided in this section. The Commissioner shall study each form for the purpose of guarding against any possible fraud, misrepresentation or other forms of unfairness. If he approves a form, he shall endorse his approval on the face of both duplicates and transmit one to the insured and keep one in his permanent files. If he disapproves a form, he shall issue an order of disapproval stating therein his reasons and transmit a copy to the insurer.
(b) All policies and provisions therein must be printed in a type of which the face is not smaller than 10-point.
A policy may be assignable or not assignable, as provided by its terms. Subject to its terms relating to assignability, any life or health insurance policy under the terms of which the beneficiary may be changed upon the sole request of the insured or owner may be assigned, either by pledge or transfer of title, by an assignment executed by the insured or owner alone and delivered to the insurer, whether or not the pledgee or assignee is the insurer. Any such assignment entitles the insurer to deal with the assignee as the owner or pledgee of the policy in accordance with the terms of the assignment until the insurer has received at its home office written notice of termination of the assignment or pledge, or written notice by or on behalf of some other person claiming some interest in the policy in conflict with the assignment.
(a) Every contract of insurance must be construed according to the terms and conditions of the policy. Where the contract is made pursuant to a written application therefore, if the insurer delivers a copy of the application with the policy to the insured, the application shall become a part of the insurance policy. If the application is not so delivered to the insured, it may not be a part of the insurance policy.
(b) If any life or health insurance policy is reinstated or renewed, and the insured or assignee or beneficiary with a vested interest under the policy makes written request to the insurer for a copy of the application, if any, for reinstatement or renewal, the insurer shall, within 30 days after the receipt at its home or branch office of the request and of satisfactory evidence of the requesting beneficiary’s vested interest, deliver or mail to the person making the request a copy of the application. If the copy is not so delivered or mailed, the insurer shall be precluded from introducing the application as evidence in any action based upon or involving the policy or its reinstatement or renewal.
(c) This section does not apply to surety insurance.
No policy may contain any provision purporting to make a portion of the charter, bylaws or other similar document of the insurer (other than the subscriber’s agreement of power of attorney of a reciprocal insurer) a part of the contract unless that portion is set forth in full in the policy. Any policy provision in violation of this section is invalid.
Whenever the proceeds of, or payments under, a life or health insurance policy become payable in accordance with the terms of the policy or the exercise of any right or privilege under the policy, and the insurer makes payment in accordance with the terms of the policy or m accordance with any written assignment of the policy, the person so designated as being entitled to the proceeds or payments shall be entitled to receive them and to give full acquittance therefor, and the payments shall fully discharge the insurer from all claims under the policy unless, before payment is made, the insurer has received at its home office written notice by or on behalf of some other person that the other person claims to be entitled to the proceeds or payments or some interest in the policy.
The Commissioner, if he considers it necessary, may require the filing by an insurer of any sales presentation material for use in the sale or the presentation for sale of any policy. The Commissioner, within 30 days after the filing of the sales presentation material, shall disapprove any sales presentation material if he finds that, in whole or in part, it is false, deceptive, or mis-leading. Upon disapproval, the sales presentation material shall not be made, issued, circulated, displayed, or given other use by the insurer or its agents.
The insurer is entitled to payment of the premium as soon as the subject matter insured is exposed to the peril insured against.
Unless the insurance contract otherwise provides, a person insured is entitled to a return of premium after a policy is cancelled or rescinded as provided herein:
(1) to the whole premium if no part of his interest in the thing insured was exposed to any of the perils insured against;
(2) where the insurance is for a definite term, and the insured surrenders his policy, to such proportion of the premium as corresponds to the unexpired portion of the term after deducting from the whole premium any claim for loss or damage which has previously accrued;
(3) when the contract is void or voidable on account of the fraud or misrepresentation of the insurer;
(4) when the contract is void or voidable on account of facts of the existence of which the insured was ignorant without his fault;
(5) When, by any default of the insured other than actual fraud, the insurer did not incur any liability under the policy.
An acknowledgment in a policy of receipt of the premium is conclusive evidence of its pay-ment, so far as to make the policy binding, notwithstanding any stipulation in the policy that it shall be binding until the premium is actually paid.
(a) All rates, rate schedules, rate plans, and methods of computing rates to be applied to any insurance transacted in American Samoa must be filed in the office of the Commissioner, and before any rates may be charged, advertised, publicized, or otherwise represented, they must have the approval of the Commissioner.
(b) No insurer may use any rates in violation of this section, or alter, amend, or otherwise change any rates without the approval of the Commissioner.
(c) No insurer may charge any rate for any insurance transacted in American Samoa in excess of the rate approved by the Commissioner for that insurer for that risk and class of insurance.
(d) A filing shall be open to public inspection immediately upon submission to the Commissioner.
An insurer, in making rates, and the Commissioner in approving them, shall apply the follow-ing standards:
(a) Rates shall not be excessive or inadequate, as herein provided, nor shall they be unfair or discriminatory.
(b) No rate may be held excessive unless such rate is unreasonably high for the insurance provided and a reasonable degree of competition does not exist in American Samoa with respect to the classification to which the rate is applicable.
(c) No rate may be held inadequate unless the rate is unreasonably low for the insurance provided and the continued use of the rate endangers the solvency of the insurer, or unless the rate is unreasonably low for the insurance provided and the use of the rate by the insurer will have the effect of destroying competition in American Samoa.
(d) Consideration must be given, to the extent applicable, to past and prospective loss experiences, to prevailing hazards, and to underwriting profits, contingencies, expenses and other normal business requirements and factors, or used by the insurer, rating, or advisory organi-zation, does not comply with the requirements and standards of 29.1560 through 29.1565, he shall, unless he has reason to believe the noncompliance is willful, give notice in writing to the insurer, rating or advisory organization stating in what manner the noncompliance is alleged to exist and specifying a time, not less than 10 days after the date of mailing, in which the noncompliance must be corrected.
Insurers are authorized to become members or subscribers of rating bureaus, or advisory organizations of a like nature and may use the rating systems, and underwriting rules and policy forms of those organizations, provided they are not excessive, inadequate or unfairly discriminatory, conform to the provisions of this part, and are approved by the Commissioner prior to their use as provided.
(a) If, within the waiting period, the Commissioner finds that a filing does not meet the requirements of 29.1560 through 29.1565, he shall send to the insurer or rating organization which made the filing, written notice of disapproval of the filing, specifying therein in what respects he finds the filing fails to meet the requirements and stating that the filing shall not become effective.
(b) If the Commissioner has reason to believe that an insurer, rating, or advisory organization or any rate, rating plan, or rating system made
The following chart indicates the maximum allowable annual motor vehicle liability rates:
Type Surcharge .00 +.40 +.90 +l .50 +2.20
Private $187.50 $262.50 $356.25 $468.75 $600.
Points 0 1 2 3 4
Commercial & Fleet 231.25
Motorcycles & Motorbikes 56.25 78.75 106.25 140.00 142.50
The points referred to are under the “Safe Driver Plan” referred to under the study conducted for the insurance commission by Mr. Clifford Miyoi entitled “Automobile Insurance Problems in American Samoa”, and dated February 1978. This plan shall be adopted by the Insurance Commissioner prior to 1 July 1978 and implemented in conjunction with these new maximum rates.
These rates are effective with policies written to cover periods commencing on 1 July 1978 and after.
(a) Annual maximum motor vehicle liability rates for buses and taxis are as follows:
Points 0 1 2
Rates $350 $450 $600
Points shall be calculated in the same manner as provided in 29.1564 for private vehicles, except that:
(1) the points shall be the total points of both the owner and all other operators of the vehicle. The owner shall identify all operators of the vehicle in the application for insurance.
(2) the rates shall apply to each vehicle to be insured.
(b) No person who has accumulated more than 2 points under the provisions of this section shall operate a bus or taxi.
(c) The Insurance Commissioner is authorized, upon notice and opportunity for hearing afforded to the owner and the insurance carrier issuing vehicle liability insurance in accordance with the Administrative Procedure Act, 4.1025 through 4.1034, to require the insurance carrier to cancel, revoke or suspend the operation of the motor vehicle liability policy of insurance covering any bus or taxi which is operated by a person who has accumulated more than 2 points under the provisions of this section. The cancellation, revocation or suspension may extend up to the remaining period of the insurance policy then in effect, and to any or all buses or taxis then owned and operated by the owner.
Any person violating 29.1560 through 29.1564 is guilty of a class B misdemeanor, and shall, upon conviction, be sentenced accordingly.
An insurer is liable:
(1) when the thing insured is rescued from a peril insured against and which would otherwise have caused a loss if in the course of the rescue, the thing is exposed to a peril not insured against, and which permanently deprives the insured of its possession, in whole or in part:
(2) if a loss is caused by efforts to rescue the thing insured from a peril insured against.
An insurer is not liable for a loss caused by the willful act of the insured; but the insurer is not exonerated by the negligence of the insured or of the Insured’s agents or others.
Failure to give notice of loss covered by any insurance within any period provided for by the policy or otherwise may not exonerate the insurer if the notice is given within a reasonable time after the insured has or should have first knowledge of the loss. In classes of insurance, except marine and fire, the insured shall have at least 10 days after the event within which to give notice of loss. No requirement of notice within a lesser period is valid.
When preliminary proof of loss is required by a policy, the insured is not bound to give such proof as would be necessary in a court of justice, but it is sufficient for him to give the best evi-dence in his power at the time.
All defects in a notice of loss, or in preliminary proof thereof, which the insured might remedy, and which the insurer omits to specify to him, without unnecessary delay, as ground of objection, are waived.
Delay in the presentation to an insurer of notice, or preliminary proof of loss, is waived if caused by an act of the insurer, or if he omits to make objection promptly and specifically upon that ground.
If a policy requires, by way of preliminary proof of loss, the certificate or testimony of a person other than the insured or beneficiary, there is sufficient compliance with the requirement if the insured or the beneficiary uses reasonable diligence to procure the certificate or testimony, and in case of refusal to give it to him, furnishes reasonable evidence to the insurer that the refusal was not induced by just grounds of disbelief in the facts necessary to be certified or testified to.
In all cases where loss occurs and the insurer liable therefor fails to pay the same within the time specified in the policy, after demand made therefor, the insurer is liable to pay the holder of the policy, in addition to the amount of such loss, 12% damages upon the amount of the loss, together with all reasonable attorney’s fees for the prosecution and collection of the loss, the attorney’s fees to be taxed by the court where the matter is heard on original action, by appeal or otherwise, and to be taxed as a part of the costs therein, and collected as other costs are or may be by law collected. Writs of attachment or garnishment filed or issued after proof of loss or death has been received by the insurer shall not defeat the provisions of this section, provided the insurer desiring to pay the amount of the claim as shown in the proof of loss or death may pay the amount into the registry of the court after issuance of writs of attachment and garnishment, in which event there shall be no further liability on the part of the insurer.
A fire or miscellaneous insurance policy, in case of a total loss of any risk insured under the classes specified in this chapter as fire or miscellaneous insurance, must be held and considered to be a liquidated demand against the insurer taking the risk for the full amount stated in the
policy, or the full amount upon which the insurer charges, collects or receives a premium; provided the provisions of 29.1570 through 29.1578 may not apply to personal property. In the event of a total loss or destruction of any personal property on which the amount of the appraisal or agreed loss is less than the total amount insured thereon, the insurer shall return to the insured the unearned premium for the excess of insurance over the appraised or agreed loss, to be paid at the same time and in the same time and manner as the loss shall be paid, and the unearned premium shall be a just and legal claim against the insurer.
Double insurance exists when the same person is insured by several insurers separately in respect to the same subject, interest and risk.
In case of double insurance, the several insurers are liable to pay losses thereon as follows:
(a) In fire and miscellaneous insurance, each insurer shall contribute ratably without regard to the dates of the several policies.
(b) In marine insurance, the liability of the several insurers for a total loss, whether actual or constructive, where the policies are not simultaneous, is in the order of the dates of the several policies. No liability attaches to a second or other subsequent policy, except as to the excess of the loss over the amount of all previous policies on the same interest. If 2 or more policies bear the same date, they are deemed to be simultaneous, and each insurer on simultaneous policies shall contribute ratably. The insolvency of any of the insurers does not affect the proportionate liability of the other insurers. All insurers on the same marine interest shall contribute ratably for a partial or average loss.
A contract of reinsurance is one by which an insurer procures a third person to insure him against loss or liability by reason of such original insurance.