Custom in Insurance Law: A Doctrinal and Applied Analysis of Usage as a Source of Legal Norms

Abstract

Custom has long served as an implicit yet powerful source of legal norms, particularly in fields characterized by technical complexity and rapid evolution. This article examines insurance custom—the unwritten practices consistently adopted by insurance market participants—as a source of legal authority in insurance contracts. While insurance regulation is increasingly comprehensive, it cannot anticipate every contingency or dispute, leaving gaps often filled by industry usage. Drawing on doctrinal legal theory and applied analysis, this study consolidates scattered jurisprudential principles and industry practices to clarify the concept, emergence, authority, types, and conditions of insurance custom. It distinguishes verbal custom (customary terminology) from practical custom (customary conduct), and analyzes their legal functions as mandatory, interpretive, and supplementary norms in contract adjudication. The article also explores judicial reliance on custom to interpret ambiguous policy terms, enforce implied obligations, or reject claims that contradict established usage. The findings highlight the dual nature of insurance custom as both a stabilizing force and a potential source of uncertainty. It argues for structured mechanisms to document, evaluate, and integrate custom into insurance adjudication, ensuring both legal predictability and responsiveness to evolving industry practices.