Insurance lottery: Does insurance cover depend on chance?

If the cover does not match the risk in the case of insurance policies that differ from the application, what is actually still insured? And what is not? The answer to this question is provided by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm.

“Once you had the advantage,” said the devil, “but that shall not apply to the next time. Yours is what grows above the earth and mine is what lies beneath.” “Fine with me, too,” replied the peasant. (The Farmer and the Devil, Grimm’s Tale)


The Federal Supreme Court (BGH, ruling of 22 June 2016 – IV ZR 431/14) decided that if the insurance policy (VS) deviates from the insurance application in favour of the policyholder (VN), the VS favourable to the VN applies. Exception is made in the event that the UN objects to this preferential treatment. A special instruction by the insurer (VR) or a reference to the deviation from the application is not required, § 5 I VVG.

A UN with occupational disability insurance had filed a complaint – the application had provided for an abstract reference for the BoD, but the policy waived this.


5 I VVG – constitutive contract design

“According to § 5 Para. 1 VVG, the insurance contract is concluded with the contents of the insurance policy if these deviate from the contents of the underlying application and the policyholder does not object to this within one month; according to the case law of the Senate, this applies in the case of a deviation favourable to the policyholder even without the conditions of Para. 2 of the provision being met, because – unlike Para. 1 – this provision is only to be applied in the case of deviations which are disadvantageous to the policyholder”.

The usual BGB-rule, that the deviation is considered a rejection combined with a new offer, does not apply, § 150 II BGB.

However, an exception applies in the event that both sides (BoD and UN) have a common divergent true intention, i.e. the UN wanted something different and the BoD has recognised this – only then does the fiction of approval of § 5 I VVG not apply. In this case, a declaration of avoidance by the declaring party, VR, is not even required (BGH, ruling of 22.02.1995 – IV ZR 58/94).

Likewise, there is no case of § 5 I VVG if the UN writes “plus fully comprehensive” on the motor vehicle liability application, but the application form already contains the note that “fully comprehensive/partially comprehensive” is not offered by the BoD (OLG Saarbrücken, judgement of 27.05.09, file no. 5 U 481/08; OLG Düsseldorf VersR 2000, 1265).

5 II VVG – instruction requirement

Conversely, if the SC deviates from the insurance application to the detriment of the UN, the BoD must “indicate that deviations are deemed to be approved if the policyholder does not object in writing within one month of receipt of the insurance policy.

The policyholder must be made aware of any deviation and the legal consequences associated with it by means of a conspicuous note in the insurance policy”, § 5 I, II VVG.

A small asterisk with a footnote “application deviation” would be too vague.


5 III VVG – reversed endorsement clause

If the reference to deviations to the detriment of the UN is not made, or is unclear, or the content of the instruction in accordance with § 5 II VVG is insufficient, “the contract is deemed to have been concluded with the content of the application of the policyholder”, § 5 III VVG.


Participation of intermediaries

If the application (§ 5 I case 1 VVG) deviates from the PC because the UN expressed certain things to an agent “eye and ear” of the board of directors – but the clerk in the office had not heard anything about it, the burden of proof lies with the UN (BGH, VersR 2002, 1089; OLG Frankfurt, r+s 2000, 114).

For a cover agreement (§ 5 case 2 VVG) prior to policy issuance, the agent must be authorised by the BoD. Changes to the application by the intermediary or broker act for or against the UN, i.e. are attributed to it.


Several deviations

Only any deviation unfavourable to the UN should be brought to the attention of the UN in the PC. Without a corresponding note in the PC, the more favourable provision applies to the UN, whether it is the provision in the insurance application or in the PC. According to the wording of § 5 II VVG, each deviation is to be assessed separately – and in the case of disadvantages compared to the application, it is to be instructed. It may then be that the insurance policy is partly valid, but partly the application, whichever is cheaper.

Insurance lottery: Does insurance cover depend on chance?

The Federal Court of Justice has so far left open the question if it is not yet clear from the beginning of the insurance coverage which was cheaper – application or VS? Suppose that in the application the glasses are insured for 300 EUR, but in the PC the smartphone is insured for 600 EUR. Now a damage for the glasses is claimed over 600 EUR. Then, according to the insurance policy, the glasses are to be reimbursed more favourably for the actual damage, but possibly not with only EUR 300 as requested, but with EUR 600 as shown in the insurance policy. Questionable, if at the same time a claim for damages for the smartphone exceeding EUR 500 is filed. Often it is only possible to determine to what extent the application or claim was more favourable in the event of a claim and not from the outset. In the event of a claim, the policyholder can therefore ultimately choose what he wants to be reimbursed.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm


by courtesy of (published on 18.04.2017)



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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

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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