The interest on delay are a legal mechanism that seeks to criminalize the failure to comply with an economic obligation within the agreed time limits. In the field of Sure.the interest on delay applies mainly when a insurance does not pay a compensation within the time limit laid down in the contract or regulations.
In this article we will explain what the interest on delay is, how they are calculated and how they are applied specifically in the insurance sector, with a practical example.
Interest on delay
The interest on delay is an additional amount to be paid by a party that fails to comply with a payment obligation, as compensation for the delay. It aims to compensate the party affected by the non-compliance and to promote timely compliance with the obligations.
In the case of insurance, they are usually applied when:
- The insurer delays the payment of compensation.
- The Tomato or insured does not comply with the payment of the premium.
Interest on late insurance
1. Interest on delay by the insurer
Where an insurer does not comply with the payment of compensation within the legal or agreed period, the insured person must be paid the corresponding interest on delay.
According to Article 20 of Law 50 / 1980 on Insurance Contract in Spain:
- The insurer has a period of 40 days since receiving the declaration of the No. to pay the compensation or make a payment on account.
- If the insurer does not meet this period, she must pay the interest on the amount due.
Calculation of interest:
- An annual interest of the legal rate increased by 50% is applied.
- If the delay exceeds two years, the interest shall be 20% per year.
2. Interest on delay by the holder
In case the Policy The insurance company may:
- To suspend the coverage until the amount due is paid.
- Require interest on late payment.
Calculation of interest on delay
The calculation of the interest on delay is carried out using the formula:
Interest = (Amount due × Interest rate × Days of delay) / 365
- Amount due is the main amount outstanding.
- Interest rate is the percentage applied according to the rules or the contract.
- Days of delay is the time elapsed since maturity from time to actual payment.
Practical example in insurance
An insured person claims a sinister to his home insurer, who validates the claim and determines compensation for 10.000 €. However, the insurer does not pay the amount until 90 days after the receipt of the claim, exceeding the 40 days legal for payment.
- Amount due: 10.000 €
- Days of delay: 90 - 40 = 50 days.
- Interest rate: Assuming that the legal interest of money is 3%, it is increased by 50% (3% + 1.5% = 4.5%).
Interest = (10,000 × 4.5% × 50) / 365 = 61.64 €
The insurer must pay the insured person the compensation for 10.000 € plus interest on late 61,64 €.
Importance of interest on late insurance
1. Protection of the insured:
They ensure that insurers meet their obligations in time and form, avoiding economic damage to the insured.
2. Promoting compliance:
They function as an incentive for both parties to the contract to meet the established deadlines.
3. Basis for legal claims:
In the event of non-compliance, the insured person is entitled to claim these interests as part of his claims.
Delay interests are a key tool for ensuring compliance with obligations in insurance contracts. Both insurers and insurers must be aware of their responsibilities and the consequences of delays in payments.
If you face a delay in payment of compensation or any other insurance obligation, remember that the interest on delay is designed to protect your rights and ensure that you receive the appropriate compensation.
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