– What insurance customers have to consider in the event of a claim in order to avoid the statute of limitations –
The Oldenburg Higher Regional Court (OLG) ruled in its judgment of 19.12.2013 (Ref. 1 U 67/13) that an insurer (VR) cannot invoke the statute of limitations after years in the case of long-term claims if it had previously issued a qualified acknowledgement.
Statute of limitations regularly after three years at the end of the year
As long as the policyholder (UN) corresponds with the BoD regarding the settlement of claims, the limitation period is suspended at best, which is equivalent to stopping a clock. Here, however, the BoD had also stated “As regards the declarations requested on your part concerning the material as well as non-material damage suffered by your client, we acknowledge the same, this acknowledgement having the effect of a declaratory judgment.”
This is not a simple acknowledgement. After the VR unjustifiably denied its benefits after 13 years due to the statute of limitations, the declaratory action of the policyholder was also successful solely due to the qualified acknowledgement.
Decisive content of the acknowledgement
Under no circumstances should the policyholder be content with a simple acknowledgement in the event of a claim. In addition, the content should not be limited to the insured benefit. Otherwise, cost increases and inflation would put you in danger of the service being increasingly devalued.
It is better to oblige the liable party itself and not only its insurer. The Insured may have unlimited liability, so a commitment by the Insurer only to the benefit agreed between the Policyholder and the Insurer is not equivalent.
In addition, the VR could become insolvent: Provisions must be made for future damages, but inflation may not be included in these for tax purposes, and the discount rate that would have to be earned on the provisions also leads to shortfalls at the low interest rate level. In view of the high risks often assumed by property insurers, insolvency is even more likely than in the case of health or life insurers – and there is no fallback solution as there.
Only in the case of pension obligations is there a separate cover pool, but even this may not be sufficient due to a lack of actual interest and inflation, even if it is separated in insolvency. If, for example, pensions are to compensate for a loss of income or the cost of long-term care, they would have to increase over the years, which may not be adequately taken into account in the provisions.
The policyholder who caused the damage will then have to check whether his VR is obliged to indemnify him and, for example, must provide suitable security for this, which would then have to be increased at a later date if necessary.
the need for acknowledgement by the injuring party and his insurer
So you should require the VR to have an unlimited obligation as in a declaratory judgment against the tortfeasor himself, not just up to the amount of insurance. If the latter refuses, one should, simply because of the risk of insolvency, or rather on the grounds that one has such an unlimited obligation, demand such an obligation from the injuring party himself in addition, with the threat of a declaratory action against him.
The safest way to do this would be if the acknowledgement is made in notarial form and, in appropriate cases, at best with submission to execution, thus reversing the risk of litigation. With the acknowledgement, the limitation period begins anew. By appropriate form and appropriate content with a limitation period of later also up to more than 30 years.
Determination of damages, including permanent and consequential damages
For example, in the case of fire damage, occupational disability, water damage, private health insurance and liability claims, insurance brokers and consultants sometimes try to settle the claims of affected policyholders. While some brokers see this as a free service, the fee consultant may charge x times the usual fees. Time and again, missed deadlines lead to the loss of legal claims, or to the loss of evidence due to the passage of time. This is the case, for example, if the insurer releases the place of loss according to his own findings.
Such a release is in no way an acknowledgement that the BoD will provide. Neither the more or less accurate expert opinion of a claims adjuster of the BoD nor the private expert opinion without the involvement of a court will really help the policyholder in the best possible way. It would not infrequently be advisable to initiate independent legal proceedings in good time before the evidence is lost, e.g. as a result of repairs.
Injured parties often want a high severance payment, while the insurer only wants to pay a pension and future obligations. It is precisely for this purpose that the demand for a qualified acknowledgement is suitable for building up considerable pressure on the insurer and its policyholder with regard to a settlement.
It depends on the exact wording, because, for example, one cannot “waive the statute of limitations” because this option is stipulated by law in an indispensable way. It is conceivable, however, to waive the raising of this objection.
Acknowledgement on the merits
Insofar as a – possibly only future – causal damage cannot yet be quantified, an acknowledgement on the merits is possible. Especially after accidents, it becomes important to have a medical examination before comparing oneself with an insurer out of court to see whether the case has healed, because otherwise one will have to bear later costs, for example of the social insurance carrier or one’s own private health insurance for rehabilitation or follow-up treatment, because according to the law or insurance conditions one must not cut off the possibilities of recourse by waiving oneself.
With a bit of luck, the insurance broker or consultant who is always trying to do his best will then have to take responsibility.
In terms of content, the acknowledgement should also contain the substitution of a declaratory judgment. The corresponding findings on the case of damage can also be made in the process, or reference can be made to a corresponding expert opinion as binding in the process.
It goes without saying that such a notarial acknowledgement as a substitute for a declaratory judgement must also regulate, for example, that the insurer cannot later refer to other objections that occur to him at some point only on the basis of later findings, for example that he would not be liable to pay on account of intent and the like. Ultimately, the insurer’s acknowledgement must be as valid as an acknowledgement by the insured person who caused the damage.
Risk of recourse with insurance brokers and insurance consultants
The fear of mistakes in the settlement of claims is apparently quite common among insurance consultants and brokers, so that they like to use freelance lawyers at their own expense. The latter come into collision at the latest when they then have themselves provided with a power of attorney and mandated by the insured person, because they then want to serve two masters at the same time. In case of doubt, the contracts are thus null and void and there is then no longer a claim to remuneration.
Some commercial and industrial brokers came up with the idea of selling their claims to insurance consultants, similar to a tipster. As soon as the insurance consultant then pays the tip commission, the insurance agent or broker is a kick-back, which he would have to settle and hand over to the customer in full without being asked, §§ 675, 667 BGB.
Extent of liability with the insurance broker and insurance consultant
The majority of intermediaries or consultants maintain at most a statutory minimum cover in their liability insurance of a good EUR 1 million. With the liability risks, already by recommendation of an insurance adviser or broker or own efforts around claim settlement this can cover often only a fraction of the responsibility.
At the insurance broker, the liability insurer would find that the settlement of claims was not even in his policy and therefore might not be insured at all.
For example, for accident victims, the goal of claim settlement might be to encourage the insurer’s willingness to pay a large settlement rather than dragging a claim out for decades with the risk that after VR the insured will continue to pay. By way of example, the following result from an actuarial loss report is illustrative:
This results in a capitalised present value of the net income lost for life of EUR 2,215,476 as of 01.03.2014.
For the total nursing care costs, the capitalized present value of the lifelong nursing care costs (personal plus material costs) amounts to EUR 2,460,260 as of March 1, 2014.
This amount can increase to up to approx. EUR 4,689,280 if the above comments on increased maintenance expenditure of up to approx. 12 hours per day are followed in total.
It will hardly be possible to determine this without fully qualified lawyers and actuarial experts, especially since in many cases there are also ancillary claims which are to be found in the insurance conditions or in the law, but which merchants like to overlook out of ignorance. The settlement of claims does not only become complex if a participant or insurer becomes insolvent, but already by the different situations of a legal subrogation, so that an acknowledgement cannot be fully enforced without further ado, if the claim for reimbursement is legally already in the hands of a health or care insurance.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.experten.de (expertenReport 12/2014)
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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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