MEXICO Law and Practice Contributed by: Carlos de la Garza, Raúl Acosta and Enrique Tamez, De la Garza & Acosta Abogados, S.C.
Furthermore, in the event of any material aggravation of the risk for the duration of the insurance contract, the policyholder must give notice to the insurer within 24 hours of becoming aware of this risk. If the poli- cyholder fails to provide this notice or if they them- selves cause a material aggravation of the risk, the obligations of the insurance company will cease by operation of law. Another very important point, which in Mexico has led to abuse by contracting and/or insured natural or legal persons, is the existence of a jurisprudential cri- terion that initially mandates insurance companies to reliably demonstrate the delivery of the general con- ditions applicable to the insurance contract to the policyholder. This jurisprudential criterion was established by the Supreme Court following conflicting decisions from two Collegiate Circuit Courts that resolved two cases in conflicting ways where the insureds were individu- als, with the Supreme Court ruling that including a website link in the policies is insufficient to fulfil the obligation to inform policyholders of the general con- ditions. This has led to many companies improperly claiming ignorance of the general conditions appli- cable to their contracts, seeking multimillion-dollar compensation to the detriment of the community of policyholders who do act in good faith. 6.2 Failure to Comply With Obligations of an Insurance Contract As mentioned in 6.1 Obligations of the Insured and Insurer , omissions or inaccurate declarations by the insured to the insurance company during the proposal of the insurance contract authorise the insurer to notify the policyholder or their beneficiaries of the rescission of the contract within 30 days following the date on which the company becomes aware of the omission or false declaration, thereby ceasing its obligations. Nevertheless, it is not uncommon for some insurance policies issued by insurance companies to include an “irrefutability” clause stipulating that the insur- ance company waives the right to dispute the validity of the policy after a certain period (typically around two years from the inception of the contract), even
if there are inaccurate declarations or omissions by the insured. 6.3 Intermediary Involvement in an Insurance Contract When an insurance agent becomes involved in nego- tiating a contract, in accordance with the provisions of the Insurance and Bonding Institutions Law as well as various judicial criteria, the agent’s acceptance of the proposal to enter into an insurance contract will be binding on the insurance company, regardless of the existence of an employment relationship or a com- mercial contract between the agent and the insurer. Similarly, the official receipts issued by insurance agents authorised by insurance institutions to poli- cyholders or insured parties for the payment of their premiums are legally binding on insurance companies. Given the responsibility of agents and the conse- quences their conduct can have for insurance com- panies, the law requires agents (either individuals or legal entities) to be accredited by the National Insur- ance and Bonding Commission to broker policies. To achieve this, they must obtain their licence and com- ply with the requirements. 6.4 Legal Requirements and Distinguishing Features of an Insurance Contract The insurance contract begins with an offer made by the policyholder or the contracting party using the forms provided by the insurance companies to their clients. Once the offer is made, the proposer is obli- gated to maintain it for a period of 15 days; this period is doubled if a medical examination is required. Offers for extensions, modifications or reinstatements of a suspended contract are considered accepted if they are submitted via certified mail with acknowl- edgment of receipt, provided the insurance company does not respond within 15 days from the date the offer is received. This acceptance is subject to the suspensive condition of approval by the Ministry of Finance and Public Credit. The general terms of the insurance must be estab- lished within the same offer form provided by the insurance company, or alternatively sent to the pro-
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