*by lawyer Dr. Johannes Fiala, MBA Financial Services (Univ. Wales), MM (Univ.), banker (IHK), certified financial and investment advisor (A.F.A.), lecturer for civil law and insurance law (Univ. of Cooperative Education)
A policyholder (VN) took out an accident insurance policy. After the claim, the insurer (VR) refused to indemnify and informed the policyholder of the 6-month period for bringing an action in accordance with § 12 III VVG. The lawyer for the insured party allowed the deadline to expire. Now the issue was whether a loss in the amount of 166,468 Euros had occurred at all, because the VR had contested the contract on the grounds of fraudulent misrepresentation of the policyholder, because the policyholder had not stated in the application that he already had another (foreign) accident insurance policy via an ADAC cover letter.
The Federal Supreme Court (BGH) decided by judgement of 28.02.2007 (Az. IV ZR 331/05) that no bad faith had existed. Malice presupposes that false facts have been pretended or true facts have been concealed. In addition, there must be intent on the part of the insured person, i.e. conscious and deliberate action. However, incorrect information in an insurance application alone does not justify this conclusion. Rather, the insured person must act against his better knowledge (awareness) when completing the application. In addition, the so-called relevance case law must also be taken into account if the insurer is to be released from its obligation to pay benefits: According to this case law, the insurer can only plead release from its obligation to pay benefits if the intentional breach of the obligation to provide information was generally suitable to seriously endanger the interests of the insurer. In addition, the insured person must be substantially at fault.
The oversight clause:
In numerous sets of conditions there is an “oversight clause”. According to this, certain breaches of obligations (e.g. notifications, notifications of increases in danger, risks, etc.) are always excluded. In the event of increases in risk, VR reserves the right to recalculate the premium. Such clauses also protect the insurance broker if he manages the contract as the policyholder’s representative. With many a broker, contract administration is constant practice, with the consequence of an initially incalculable liability arising from a continuing obligation. In this respect such clauses mean a relief, because the insurance broker would be forced in the context of continuing obligations in the doubt to make “risk and object examination” constantly.
Tip for the insurance broker:
The oversight clause can thus protect the policyholder from a release from benefits and the insurance broker from liability due to insufficient control of the risk object within the scope of his duties as a trustee.
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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