CZECH REPUBLIC Law and Practice Contributed by: Eva Nováková, Michaela Šmotková, Martin Sztefek and Kateřina Chizzola Bardonová, JŠK, advokátní kancelář, s.r.o.
a fine. In certain cases, this failure may also extend the policyholder’s right to withdraw, particularly if the policyholder is a consumer. 6.3 Intermediary Involvement in an Insurance Contract In the Czech Republic, the involvement of an inter- mediary in the negotiating of an insurance contract depends on their status and, where applicable, the entity with which they have a contractual relationship. If the intermediary is independent, their position depends on whether they have a contract with the insurer (acting as an agent representing the insurer) or with the customer (acting as a broker). If the inter- mediary is a tied agent or an ancillary insurance inter- mediary, their position is determined by the entity they represent; given the market situation (see 5.1 Distribu- tion of Insurance and Reinsurance Products ), they will generally act as an agent. The intermediary is obliged to comply with applica- ble insurance distribution regulations, provide accu- rate and complete information to both parties, and ensure that the customer receives all legally required disclosures (see also 5.1 Distribution of Insurance and Reinsurance Products ). It should also be noted that, although intermediar- ies often use their own questionnaires for insured, the insured is only obliged to answer the insurer’s ques- tions truthfully and completely. To preserve all rights and obligations, even when using an intermediary, the insurer must submit written questions to the insured (which may be delivered through the intermediary), and the insured must respond to those written ques- tions. 6.4 Legal Requirements and Distinguishing Features of an Insurance Contract The essential elements of an insurance contract in the Czech Republic are (i) the undertaking to provide insurance benefits (usually monetary) upon the (ii) occurrence of an insured fortuitous event, in return for (iii) consideration in the form of an insurance premium. Under the Czech Civil Code, an insurance contract must generally be in written form, except for short-
term insurance not exceeding one year (eg, travel insurance under one year). After conclusion, the insurer must provide confirmation of the contract with details listed in Section 2777 of the Civil Code. Mandatory content includes identification of parties, beneficiary, insured risk, insurance period, premium terms, coverage scope, exclusions, and claims pro- cedures. The policyholder must have an insurable interest (Sections 2761 to 2765 of the Civil Code), meaning a legitimate economic interest in their own life, health, or property. This ensures the insured will suffer a real financial loss if the insured event occurs. Without insurable interest, the contract is invalid. There is a presumption of interest where a relationship or advan- tage exists if the insured person remains alive, or where loss of another’s property would directly cause financial harm to the policyholder. Future insurable interests may also be insured in property insurance. Insurance contracts are based on the principle of utmost good faith, requiring full disclosure of material facts by both parties. The insured is obliged to answer the insurer’s questions truthfully and completely. 6.5 Multiple Insured or Potential Beneficiaries In the Czech Republic, insurance contracts can be concluded for the benefit of third parties such as ten- ants, subcontractors, or mortgagees (Section 2768 of the Civil Code). These beneficiaries ( oprávněné osoby ) are entitled to insurance proceeds even if they are not named insureds, provided the insured consents after being informed of the contract’s content. Consent of the beneficiary is also required, but it can be given later, even at the time of claiming benefits. The policyholder must have an insurable interest in the third party’s property or liability, which is generally presumed if there is an economic or legal connection; consent from the third party confirms this interest. Insurance policies may also cover multiple insureds without listing each individually. In such cases, the contract must identify beneficiaries by a specific status that clearly determines the person at the time of the insured event. Examples include compulsory motor vehicle liability insurance, where every driver
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