An insurance contract is the agreement by which a party, called the insurer, is obliged to compensate for a damage or to pay a sum of money to another party called the policyholder, upon verifying the eventuality foreseen in the change and in exchange for payment of a certain agreed price. In Spain, the insurance contract is regulated by Law 50/1980, of October 8, on the Insurance Contract.
Functioning - real elements
The policyholder, who may also be the insured, is obliged to pay a premium, in exchange for the coverage granted by the insurer. This premium allows to avoid a potential major economic damage in case the accident occurs.
The insurance contract is consensual and the rights and obligations involved are considered as such since the conclusion of the convention. The different real elements, without which the existence of the insurance contract is not admitted, are the following:
- insurable interest
- the insurable risk
- the premium
- the obligation of the insurer to indemnify
Subjects - personal elements
The insurer: is the legal person that is dedicated to assume outside risks by receiving a certain price called premium.
The policyholder: is the person who hires and subscribes the insurance policy, on their own or from a third party, for which they must pay a premium to the insurer. The person of the policyholder may also be the beneficiary.
The insured: is the holder of the right to compensation whose transfer to the beneficiary is possible.
The beneficiary: is the person entitled to receive the insured's benefit.