Unlike many African countries, Rwanda is one of those countries where particular emphasis is placed on insurance. Let us recall at the outset that insurance is a service, compulsory in some cases and optional in others. It generally involves two parties, namely the insured and the insurer, and is governed by an insurance contract. Article 1 paragraph 1 of the DECRET-LOI n° 20/75 of JUNE 1975 governing Insurance in Rwanda defines an insurance contract as: "a contract by which a person, called the insurer, undertakes, in return for the payment of one or more premiums, to provide a person, called the insured or beneficiary, with a pecuniary benefit in the event of the realisation of a given risk" . In general, insurance contracts are divided into two main groups or two broad types of insurance: Life Insurance and General Insurance (damage insurance_the protection is extended for assets and properties)
Damage insurance, which is subdivided into property insurance and liability insurance, consists of compensating the insured or the beneficiary in the event of a loss [1] , including theft, fire, shipwreck, death of the policyholder or a beneficiary or water damage, or, as stated in Article 1(2) of the aforementioned decree-law: "Damage insurance covers risks affecting property or risks arising from the civil liability of the insured". Damage insurance is subject to the principle of indemnity, i.e. the amount of the benefit is necessarily proportional to the damage actually suffered, or more simply, it gives rise to the payment of an indemnity equal to the amount of the loss caused by the accident. The insured must not benefit from any enrichment following the occurrence of a loss.
Life insurance is a form of insurance set up to cover the physical person, the insured. According to Article 1 paragraph 3 of the decree law: "insurance of persons covers risks arising from death or life, or risks of bodily injury or illness". Contrary to the indemnity principle, "... the sums insured are freely fixed by the parties and are due without taking into account the prejudice suffered by the insured" (Article 38 of the decree law).
Damage insurance is the one that is generally at the heart of disputes, mainly between the insured and the insurer, the latter often refusing to pay the indemnity when a loss occurs, sometimes for well-founded reasons but most often for fallacious ones. In our professional practice, representing mostly the insured, we have observed three arguments abused by the insurers to either avoid the obligation to pay the indemnity or to pay a derisory indemnity compared to what should be. Insurers generally invoke the insured’s fault or non-payment of the premium to avoid paying the indemnity, or underinsurance, at the time of the loss, and it should be explained why these arguments are often spurious.

ON THE FAULT OF THE INSURER AS A BASIS FOR REFUSING COMPENSATION
It is common for insurers to use a variety of schemes and arguments to avoid fulfilling their obligations when a loss occurs. One argument regularly used by insurers to avoid paying compensation to the insured or the beneficiary is the fault of the insured. Of course, the fault of the insured can be the basis for a policy exclusion (i.e. providing the basis for a refusal of compensation), but this is not automatic and a number of factors must be taken into account.
In a relatively recent case we were acting for a client who sued his insurer for refusing to pay him the compensation after a loss covered by his insurance contract. The policy provided for a number of covered risks, one of which was fire. Unfortunately for our client, a fire broke out in his premises, destroying almost everything in its path. Contacted in the days that followed, the insurer sent an expert who, after having carried out his assessment, produced a report concluding that the fire was the result of a fault on the part of the insured. This report contradicted that of the police expert who had concluded that the fire was accidental. Based on the report of its expert, the insurer refused to compensate our client, invoking the fault he had allegedly committed. Having brought an action before the court of first instance to contest the insurer’s decision, we won the case. The insurer subsequently appealed against the judgement, and the case is still pending.
While recognising that the insured’s fault can be used as a basis for the insurer not to pay the indemnity, it should be noted that this is not absolute. Indeed, as stated in Article 11 of the 1975 decree law: "The insurer guarantees the insured against the risks provided for in the contract. It guarantees against risks due to fortuitous events and to the fault of the insured, unless otherwise stipulated. Notwithstanding any clause to the contrary, the insurer cannot guarantee against risks arising from the intentional fault of the insured." In other words, the contract must either contain a clause excluding cover in the event of the insured’s fault or, in the absence of a clause, the insured’s fault must be intentional.
Let us quickly address the notion of intentional fault to specify that in insurance law, intentional fault is only characterised when the insured has committed a wrongful act with: the will to commit it in the knowledge of its wrongful nature, and the will to cause the damage as it occurred. In this case, it will be up to the insurer to prove the insured’s wrongful act since Article 25 of the 1975 decree law provides that: "...The burden of proof of the origin of the loss or damage lies with the insurer who claims to be released from his obligation."
The case law is in line with this, and it is this position that the High Court of Commerce retained in its decision RCOMA 00728/2016/CHC/HCC, moreover reaffirmed by the Supreme Court [2], when it condemned SORAS Assurances Générales Ltd which invoked a fault of the insured as a cause of the fire of its premises, to pay damages to the insured Mr. GASHAMURA Anicet.
Returning to the case briefly presented above, it can be stated that in the absence of a clause excluding coverage in case of fault by the insured, and in the absence of proof of ’intentional’ fault by our client, his insurer was not justified in refusing to pay him the indemnity agreed.

UNDER-INSURANCE AND THE REFUSAL OF INDEMNIFICATION
Underinsurance is characterised by the insufficiency of the sum insured in relation to the sum that should have been insured. In insurance where the amount of the insured value is determinable, the owner of an object may insure it for only part of its value and choose to retain part of the loss in the event of a claim, in particular to limit the amount of the insurance premiums. He thus remains his own insurer for a part of the value of the insured item. This is an expression of the parties’ contractual freedom, which cannot be regarded as fraud. However, it may happen that the underinsurance is the result of bad faith on the part of the insured, who has misrepresented the risk.
It may also happen that the underinsurance results from a wrong assessment of the risk by the insurer, as was the case in a matter we dealt with. After a loss, the insurer claimed that the insured property was underinsured and that it did not have to pay any compensation. However, it should be pointed out that the insurer, before fixing the premium, had itself carried out an evaluation of the property to be insured, and was aware of the value of the property not on the basis of the insured’s declarations, but on the basis of its own evaluation. Therefore, to claim after the loss that the property was underinsured was an admission by the insurer that he had made a mistake. Since no one could claim for his own wrongdoing, he could not impose the consequences of his error on the insured.
Moreover, the consequence of underinsurance, however fraudulent, is not the absence of compensation. Indeed, it is clear from the provisions of Article 28 of the Decree Law that: "If, on the day of the loss, the item has a value greater than the sum guaranteed, the insured is considered to remain his own insurer for the excess and consequently bears a proportional share of the damage". Furthermore, according to Article 17: "If the reluctance or misrepresentation is not intentional, the bad faith of the insured not being established, it does not entail, notwithstanding any clause to the contrary, nullity of the contract. If they are discovered before any loss, the insurer may cancel the contract one month after notification to the insured or maintain it with an increase in the premium. If the reluctance or misrepresentation is discovered after the loss, the indemnity is reduced in proportion to the rate of premiums paid in relation to the rates of premiums which would have been due if the risks had been fully and accurately declared. " It is therefore clear that underinsurance can never lead to a refusal to indemnify, the sanction in the case of underinsurance due to bad faith on the part of the insured being the application of the proportional capital rule (or the premium base). In this case, the calculation of the amount of the indemnity to be paid is made according to the formula: INDEMNITY = DAMAGE X (DECLARED VALUE / INSURABLE VALUE).
It is thus abusively that some insurers refuse to compensate the insured for reasons of underinsurance, or proceed with vicious mathematical calculations to deceive the vigilance of the insured who will inevitably not understand anything, all in order to pay them derisory amounts.

FAILURE TO PAY THE PREMIUM AS A BASIS FOR REFUSING INDEMNIFICATION
If there is another argument very often invoked by insurers not to pay the indemnity to the insured in the event of a claim, it is this one: non-payment of the premium. However, non-payment of the premium does not ipso facto lead to cancellation of the contract or necessarily lead to a refusal of compensation.
The first four paragraphs of Article 14 of the Decree Law state that: "The policyholder is obliged to pay the agreed premium at the times set out in the contract. In the absence of payment on the due date and notwithstanding any clause to the contrary, there can be no cancellation by right. The insurer must give the insured notice to pay by registered letter with acknowledgement of receipt. Notwithstanding any clause to the contrary, this formal notice shall only have the effect of suspending the contract after a period of one month, if payment is not made. Once the thirty-day period has expired, the insurer may take action for payment of the premium or request cancellation of the contract. In case of payment by the insured, the contract is reinstated on the day of payment."
It follows that failure to pay a premium gives rise first of all to a formal notice served on the insured by the insurer, who will only suspend the contract if payment has not been made within one month. In other words, if in the meantime the claim occurs, the insured will be fully entitled to receive indemnity.

From the above, it is clear that insurers do not always play their role in protecting people and their assets. They often consider their financial interests above all else, and therefore use all means to avoid paying the amount of the guarantee. It is therefore advisable for the insured to contact a lawyer when an insurer, for whatever reason, refuses to pay the amount of the guarantee.
Before signing an insurance contract, we advise policyholders to ask the insurer or its representative for all the documents relating to the subscription, especially those mentioning the rights and obligations towards the insurer. It is also very important to read all the terms of the contract carefully and ask for more information on points that seem ambiguous.
Let’s take a recent case as an example to understand how fundamental it is to carefully read and understand the insurance contract before signing it. A client contacted us a few months ago to sue her insurer on the grounds that he had refused to pay her a compensation following a loss. She had subscribed to a home insurance policy that covered several risks, including water damage. Following heavy rain, there was flooding in the area and the run-off water caused damage to the house in question. She claimed that she was entitled to compensation under the water damage guarantee. Unfortunately, not having read the entire clause relating to this guarantee, she had not read that there was a paragraph which provided for an exclusion of guarantee in the event of flooding or damage resulting from run-off water, wherever it originated.
In short, our best advice would be to actually consult your lawyer before signing your insurance contract, or any other contract.