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What is microinsurance? | Legal insurance blog for property insurance



After Hurricane Maria caused catastrophic damage in Puerto Rico, many new laws and amendments were made to benefit policyholders. As mentioned on my previous blog, 1 one of these laws gave policyholders the opportunity to micro-insurance but it was not until recently (almost three years after the laws) that the first micro-insurance company, Optima Insurance, is now available to policyholders.

Puerto Rico's insurance code defines a micro-insurance as:

[A] n insurance with low premium and coverage, where the benefit is based on a predetermined fixed amount, as determined in the terms of the policy. 2

It also defines catastrophic micro-insurance as a,

Class of parametric micro-insurance that offers coverage for financial losses to an individual resident of Puerto Rico caused by earthquake, storm, cyclone , hurricane, flood, fire and / or other natural disaster occurring in a geographic area or bordering Puerto Rico, as predetermined in the terms of the policy. Entitlement to benefits provided in the policy will be based on a predetermined fixed amount arising from the occurrence of the catastrophic event (triggering event) recognized by a competent federal authority or body. The Insurance Commissioner will establish the standards that will regulate micro-insurance contracts or insurances, including tax rates, to ensure that they are not excessive, insufficient, unfairly unequal or in any other way contrary to the purpose of the micro-insurance. 4 Claims will also be governed by the insurance code with the following conditions: 5

  1. Insurers must confirm receipt of micro-insurance claims submitted by the insured within twenty-four (24) hours of notification. Any notification made to a general agent, authorized representative and / or administrator of micro-insurance regarding a claim for micro-insurance processed or taken out as a distributor of that micro-insurance shall be understood as a notification to a person authorized by the insurer in your name.
  2. Any errors or insufficient information or documentation in the damages must be notified to the insured in writing within the next two (2) days after the damages have been submitted. The notice of error or insufficient information or documents, when the requested information consists of essentially the same information already provided in the claim, will not interrupt the condition for resolving the claim.
  3. Settlement of any micro-insurance claim will be made on or before ten (1
    0) calendar days after the claim has been submitted. The Commissioner may order the immediate settlement of any claim if he considers that the settlement of the claim is being delayed unjustifiably or unjustifiably.
  4. The micro-insurance indemnity will be independent of other insurances. Not every priority clause or area of ​​responsibility will apply to micro-insurance.

With the hurricane season 2021 just a few weeks away, policyholders should be aware of the various options available to protect their properties.
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1 https://www.propertyinsurancecoveragelaw.com/2018/12/articles/consumer-protection/puerto-rico-approves-amendments-to-the-insurance-code-to-protect -policyholders-and-improve- procedures for claim management /
2 Microinsurance, definition and approved types, 26 LPRA section 1523.
3 Id.
4 Micro Insurance Rate, 26 L.P.R.A Section 1530
5 Claims; conditions for dissolution and compensation, 26 L.P.R.A. 1536


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