The Scope of Insured Legal Protection from Special Penalties of Breaching Contractual Obligations in the Omani Commercial Insurance and Takaful Law

Abstract

ABSTRACT This study aims to address the legal protection of the insured against specific penalties in both commercial insurance and Takaful insurance under Omani law, and compare it with Jordanian and Egyptian laws. The problem in this study lies in the fact that the insured party in the insurance contract is a weak party (given that the insurance contract is an adhesion contract). Accordingly, the insurer often solely drafts the contract and frequently includes harsh penalties that violate the general theory of contractual liability, which makes it likely to be unjust and inequitable, leading to a disruption of the intended contractual balance, as is the case with what is called penalty of nullity, penalty of lapse, or insurance suspension penalty. The study employed the inductive, analytical, and comparative methods. The study concluded that the Omani legislator's abandonment to regulate insurance contracts has left ample room for insurers to include harsh penalties in their contracts. In contrast, it can be noticed that the Egyptian and Jordanian legislators' regulation of the insurance contract has significantly curtailed the insurer's powers to include such penalties in the contracts he undertakes. The study concluded with several recommendations, the most important of which is that the legislator of the studied jurisdiction should enact a special law to regulate insurance contracts, given its significant economic and social importance, and its unique provisions distinct from other contracts. Also, a special recommendation to the Omani legislature is to follow the Egyptian and Jordanian legislators in combating insurance penalties by imposing additional substantive and procedural restrictions on the legitimacy of these penalties. It is also suggested that the Omani legislature impose restrictions on insurance companies to ensure that the insured are fully informed about the terms and conditions of insurance documents.