OMAN Law and Practice Contributed by: Abdulredha Al Lawati, Zainab Al Lawati, Daniyal Khalid and Aoun Al Zadjali, ALC Lawyers & Counsel
separately could increase the number of deductibles while potentially allowing separate limits to apply, depending upon the wording. In practice, disputes frequently concern the relation- ship between the overall policy limit and more specific sub-limits, rather than aggregation alone. Substantial commercial and project policies may contain separate limits applicable to particular extensions, locations, categories of property, causes of loss or heads of expense. The financial difference can be substantial, particularly where a policy carries a high overall sum insured but a significantly lower limit applies to the particular circumstances in which the loss occurred. The first issue is therefore often one of characterisa- tion. An insured may establish that physical loss or damage falls generally within the material-damage section, but the insurer may contend that the circum- stances bringing that property within cover arise only through a particular extension and that the corre- sponding sub-limit therefore represents the maximum indemnity available. This is particularly significant for property located away from the principal insured site. Policies encountered in substantial Omani pro- ject matters have, for example, extended material- damage cover to off-site storage subject to a fixed monetary limit and specified loss-prevention require- ments, notwithstanding a substantially higher overall sum insured for the project. In some matters, the limitation structure has been more complex still. Policies have provided different sub-limits depending upon the law applicable to the particular risk or liability, with the same policy there- fore capable of producing two different maximum indemnities depending upon which legal regime gov- erned the insured exposure. In such cases, identifying the applicable law is not merely a preliminary conflicts question; it can directly determine the monetary ceil- ing of the insurer’s liability. The court may therefore be required first to identify the law governing the relevant risk or liability and then apply the corresponding con- tractual sub-limit. Omani courts have given effect to clearly drafted and applicable sub-limits when assessing the amount recoverable under the policy. Where the policy dis-
tinctly identifies the relevant category of risk and the corresponding monetary limitation, the existence of a larger overall sum insured has not, by itself, displaced that specific limit. Disputes therefore tend to focus on whether the loss properly falls within the provision carrying the sub-limit, rather than on whether a clear and applicable sub-limit can simply be disregarded. 4.5 Sanctions and Illegality Issues Sanctions and illegality issues arise mainly in cross- border insurance and reinsurance where an insured, beneficiary, reinsurer, bank or payment destination presents an AML/CFT or targeted-financial-sanctions concern. The analysis should distinguish substantive coverage from the ability lawfully or practically to make payment. A claim may fall within cover while payment is delayed or restricted by a legal or banking constraint. Sepa- rately, the policy may contain a sanctions or illegality clause affecting the contractual obligation. Foreign sanctions may also bind a reinsurer or correspondent bank even where they do not themselves form part of Omani law. Article 58 (1) also limits certain forfeiture provisions based on breach of law. Insurers should therefore identify the particular legal restriction, policy wording and payment route rather than treating sanctions as a single coverage defence. 4.6 Late Payment and Claims Handling Practices Claims handling has received increased regula- tory attention, particularly through the 2026 amend- ments to the Unified Motor Insurance Policy. Decision E/1/2026 introduced defined periods for issuing repair orders, completing repairs and making accepted cash settlements, together with specified financial conse- quences for delay. The amendments also permit cash settlement as an alternative to insurer-arranged repair and expand the categories of parts that may be replaced with- out depreciation. This is significant because claims- handling delay can itself produce a defined monetary consequence in the motor context.
209 I NSURANCE L I T IGATI O N 2026
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