
Hugo Keulers
Insurance and Reinsurance
Commercial law
Dispute Resolution
Energy
Business Criminal Law
hugo.keulers@lydian.be
Insurers usually combine various types of wording and techniques to describe coverage. It is possible to distinguish positive description of the coverage (“this contract covers damage to or loss of car X and its contents on an all risk basis”) from negative descriptions of coverage (“except for losses to jewellery inside the car”) and loss of cover clauses (“except if the loss is caused by the insured leaving the car unsupervised and unlocked”).
Loss of cover clauses penalize the insured for risky behaviour by allowing the insurer to refuse coverage for resulting losses. Insurers frequently invoke them and insureds often fiercely oppose their application, making them one of the prime sources of insurance disputes.
For most insurance contracts concluded under Belgian law, loss of cover clauses have to comply with article 65 of the Belgian Insurance Act. This article aims at protecting the insured by imposing the following rules:
Not all questions related to loss of cover clauses are clearly answered by the act, however. This explains why the Belgian Supreme Court (Cour de cassation) frequently steps in to clarify certain other aspects of these essential clauses. It did so on two occasions recently.
The judgement 10 March 2025 concerned the relationship between article 65 of the Insurance Act (in its requirement of specificity) with article 62, second section Insurance Act, which provides:
The case concerned the theft of a car that was left unlocked on the driveway of a house - keys on the driver’s seat. The driver was fetching her daughter inside to go to an appointment. When the driver came back with her daughter, the car had been stolen. The insurance contract provided for loss of cover in case of “theft when one does not take the indispensable precautionary measures (e.g. unlocked doors or trunk […] keys […] inside the vehicle”). The insurer had successfully invoked this loss of cover clause before the trial court.
Before the Supreme Court, the insured argued that from a combined reading of articles 65 and 62, second section of the Insurance Act, it followed that only loss of cover clauses for instances of gross negligence were allowed under Belgian law.
The Belgian Supreme Court dismissed this argument in clear terms, stating that
The above ruling confirms that loss of cover clauses remain allowed for instances of normal negligence, as long as they are described in a sufficiently specific way and as long as the insurer proves the causal link between the breach of the specified duty imposed upon the insured and the loss. This ruling will be welcomed by insurers, who would otherwise have seen a large part of their loss of cover clauses invalidated.
The judgement of 12 May 2025 reconfirms the Supreme Court’s position that an insurer can only validly invoke a loss of cover clause for gross negligence against an insured who has personally committed the breach. In other words, the breach by one insured A of a duty sanctioned with loss of cover for gross negligence, resulting in the loss of another insured B, does not entitle the insurer to refuse coverage towards insured B. This reasoning can be very important and relevant for instance in Construction All Risk coverage disputes, as there typically are many insured parties under this type of insurance contract.
The case concerned the (property) insurance of a car, which a leasing firm had let to a private company. The private company had, in turn, insured the car against property damage with the insurer. Under the insurance contract, not only the private company itself, but also another person (likely its owner and director) qualified as insured. The latter caused an accident by drunk driving. The leased car was a total loss. When the private company (who had to reimburse the leasing company) requested coverage from the insurer, it refused and invoked the loss of cover clause for gross negligence, which excluded losses “that result from gross negligence of the insured, for instance when the driver that has caused the accident is in a state of alcohol intoxication of more than 0,8 grams per litre of blood or in a state of drunkenness”. The trial court applied this provision, noting that the insurer had proved with a sufficient degree of certainty that the driver was drunk at the time of the incident.
The Supreme Court invalidated the decision of the trial court, pointing out that the court had not confirmed (on a factual level) that gross negligence had been committed by the insured claiming coverage (i.e. the private company instead of the driver). In these circumstances, the trial court could not validly (from a legal point of view) conclude that the loss of cover for gross negligence applied. According to the Supreme Court, the trial court did not sufficiently justify its dismissal of the insured’s claim.
This judgement will come as a relief for the many Belgian companies that offer company cars to their employees under a leasing contract. Conversely, for insurers it is important to note that they will still have to pay the employer-policyholder in case of a loss of the car due to employee behaviour that qualifies as gross negligence. Even in cases where there is a very close link between insureds (such as the link between a private company and its shareholder / director), the insurer should demonstrate, and the trial court should confirm, that the insured claiming coverage (the company) personally committed gross negligence.
The Belgian Insurance Act is protective for policyholders and insureds. This is often reinforced by case law that is not always in favour of insurers. This is illustrated, amongst other things, by the case law of the Belgian Supreme Court on loss of cover clauses. The Belgian Supreme Court regularly sanctions the requirement of specificity and the personal character of the loss of cover. However, even within that general framework, there are limits. The Supreme Court does not go as far as to entirely blur the distinction between article 62, section 2 of the Insurance Act (on gross negligence) on the one hand and article 65 of the Insurance Act (on loss of cover clauses) on the other. Loss of cover clauses relating to instances of normal negligence remain possible, as long as they pass the specificity test in the policy wording.
Please contact us if you wish to receive more information on this subject.
Insurance and Reinsurance
Commercial law
Dispute Resolution
Energy
Business Criminal Law
hugo.keulers@lydian.be
Insurance and Reinsurance
Commercial law
Dispute Resolution
Regulated Markets & Market Regulators
Health
Bodily injury
sandra.lodewijckx@lydian.be