– How the release leads to the thwarting of evidence and denial of benefits -.
Evidence thwarting by the policyholder in the event of a claim
Whoever starts to repair the damage after the so-called release by the insurer bears the risk of not being able to prove the amount of damage later on. For example, when the damaged household goods have been disposed of or the damaged components have been removed. This is then called obstruction of evidence by the policyholder.
Policyholders with their own risk management take precautions anyway by having an annual inventory, which shows the inventory with acquisition costs and current value (not tax value). It is fatal for insurance intermediaries who rely on (incorrect) tax balance sheets – for example, if assets that have already been written off are completely missing.
Approval by the insurer for repair does not yet mean that the insurer will assume the costs.
The so-called release only means that the insurer has no objection when the policyholder starts the repair. By the release he cannot refer later to an obligation injury by the change of the damage picture and with it complication of his damage determinations and reject already therefore his achievement completely. However, this is not usually associated with a binding declaration of assumption of costs (OLG Frankfurt a. M., judgement of 18.04.2001, ref. 7 U 97/00).
Does the insurer provoke the obstruction of evidence by releasing it to repair the damage?
However, because the release by the insurer virtually provokes this thwarting of evidence, the Higher Regional Court of Saarbrücken ruled in its judgment of 19 September 2012 (5 U 68/12-9) that after the release the duty to provide evidence of damage was no longer reasonable for the policyholder. This was a consequence of the incorrect information provided by the insurer.
The insurer’s duty to advise in the event of a recognisable need for advice on the part of the policyholder
Because insurers are obliged to provide advice under Section 6 of the German Insurance Contract Act (VVG) if insureds recognizably require it, the release, which was not explained further, constituted a breach of this duty to provide advice. Therefore, this would instead be an obstruction of evidence by the insurer. However, this does not mean that the Insured is deemed to have provided proof of any alleged damage. However, it was no longer reasonable to expect the policyholder to provide full proof of loss. Otherwise, any insurer could evade its obligation to pay insurance benefits by providing faulty advice at the time of release.
No obstruction of evidence in the event of the possibility of securing evidence by independent proceedings for the taking of evidence
The Federal Court of Justice (BGH, judgment of 11 June 2015, Case No. I ZR 226/13) ruled that in the event that the other party has thwarted the presentation of evidence, the taking of evidence cannot be completely omitted. Rather, the evidence (supplementary, if necessary) offered by the party required to provide evidence must first be taken. “If such evidence is not available, or if the party bearing the burden of proof remains without evidence after the result of the evidentiary hearing, a shift in the burden of proof must be considered and the offers of proof made by the litigant must be pursued.”
The insurer’s claims adjuster as a potential trap for the insurance customer?
Insurance companies call in claims adjusters (including freelancers). Their aim can be to keep the compensation of the insurance customer within limits – in case of doubt perhaps combined with a success commission related to the savings of the insurer. When using agents to settle claims, this can also be achieved by their well-intentioned message that the insurer has declared release.
As a preventive measure, insured persons can be assisted by a private assessor they have commissioned themselves – although the cost of this may only end up increasing the damage initially. An own exact picture documentation of the damage and all damaged objects recommended by some insurers is of doubtful value in view of the possibilities of modern picture processing software – witnesses help, as far as they can remember then.
Opportunity for insurers to save themselves considerable expense in settling claims
Successfully, however, insurers can only declare the release of customers of insurance brokers and leave the advice to them. If the broker’s client then starts to repair the damage, the insurer, who is therefore not obliged to give advice, can always effectively invoke the broker’s failure to provide evidence and thus refuse benefits, insofar as the injured party can now no longer prove the damage. However, the broker’s liability due to the erroneous advice which caused this is then also in vain due to the lack of provable damage.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
www.versicherungsbote.de (on 07/26/2021)
www.experten.de (published 27/07/2021)
www.network-karriere.com (published in issue 08/2021 under the heading: Damage repair after floods and other damage)
www.p3-news.com (published 07/28/2021 under the headline: Release by insurers to repair damage after floods
and other damages)
www.taspo.de (published 07/27/2021 under the headline: Underwriting Trap Doors in Claims Settlement).
www.versicherungsjournal.de (published 07/27/2021 under the headline: Flood Damage: How Insurer’s Release Leads to Evidence Obstruction and Denial of Benefits).
www.versicherungsbote.de (published on 26.07.2021 under the heading: Claims settlement: release is not yet cost coverage)
www.ddh.de (published 26/07/2021)
www.paderzeitung.de (published 07/26/2021 under the heading: How Release Leads to Evidence Obstruction and Denial of Benefits).
www.news-freiburg.de (published 07/26/2021 under the heading: How Release Leads to Evidence Obstruction and Denial of Benefits).
www.bavaria-press.de (published 07/26/2021 under the heading: How Release Leads to Evidence Obstruction and Denial of Benefits).
www.pulic-weg.de (published 07/26/2021 under the heading: How Release Leads to Evidence Obstruction and Denial of Benefits).
www.detmolder-zeitung.de (published 07/26/2021 under the heading: How Release Leads to Evidence Obstruction and Denial of Benefits).
www.bauernzeitung.de (published in Farmer’s Gazette, 31 Week 2021, page 47 under the headline: When the water is gone again)
www.submission.de (published in the Submissions Gazette No. 150 of 05.08.2021)
www.hotelinterngroup.de (published in New Facts hotelintern of 30.07.2021, page 16 – 17 under the heading: The Devil in the Details – Release after Flood or Other Damage).
www.network-Karriere.com (published in Nework-CareerEdition 8.2021, page 30 under the heading: Damage repair after floods and other damage)
www.nd-aktuell.de (published 06/08/2021 under the heading: The Evidentiary Defeat and Denial of Benefits).
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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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