Recent Cassation case law on the Insurance Act 2014: annual overview

In accordance with Article 23 IA, all clauses in an insurance contract must be drafted in a clear and precise manner. In case of doubt regarding their interpretation, the clause most favourable to the insured shall prevail.

In a ruling on 12 January 2024, the Court of Cassation had the opportunity to clarify the scope of this obligation. The dispute concerned damage caused to a vehicle after an additive (AdBlue) was mistakenly poured into the diesel fuel tank rather than into the designated tank. The parties disagreed on whether the damage was covered by the section material damages in the insurance policy. The insured argued that the refuelling error should be treated as an instance of "incompatible fuel" or "accident," both of which are covered by the policy, and that the ambiguity of the policy terms justified an interpretation in favour of the insured, in accordance with Article 23 IA.

According to the insured, the insurer would have violated Articles 23, §1 IA and VI.37 of the Economic Law Code by failing to draft its general terms in clear and precise terms and not expressly stating whether such additive errors were covered under the "material damage" guarantee.

The insurer, on the other hand, argued that the terms of the guarantee were sufficiently clear and did not explicitly cover errors involving AdBlue.

On appeal, the court ruled that the lack of precision regarding specific cases, such as the introduction of AdBlue into a diesel tank, did not violate the clarity requirements imposed by the law. The court argued that it is not the judge's role to extend coverage to cases not provided for in the contract. The appellants argued that technological developments and Euro 6 standards made AdBlue indispensable, and that the insurer should have accounted for this. However, the Court of Appeal rejected the idea of a teleological interpretation and confirmed that the damage caused by a refuelling error was not covered under the "material damage" guarantee.

The Court of Cassation confirmed this decision, stating that the insurer's obligation to draft clear and precise clauses does not require altering the wording of existing terms to account for technological developments or specifying whether each particular scenario is covered by the risk.

Regarding the concept of "accident," the plaintiffs argued that in the absence of a definition in the policy terms, the ambiguity of the term required the application of the rule of favourable interpretation in favour of the insured (Article 23 IA) and the qualification of the incident as an accident. On appeal, the Court had noted that the term "accident" was neither defined by law nor by the contract but could be interpreted in its usual sense, i.e., an "unexpected, unforeseeable event with harmful effects." On this basis, the Court of Appeal ruled that pouring AdBlue into a vehicle's fuel tank could not be classified as an "unexpected event."

The Court of Cassation confirmed this analysis, ruling that:

1. The usual meaning of the term "accident" is clear and recognized by the parties.
2. The lack of a contractual or legal definition does not in itself create sufficient ambiguity to justify a favourable interpretation for the insured.

Consequently, the Court confirmed the Court of Appeal's decision, ruling that the insurer had not violated its obligation to draft the insurance contract in a clear and precise manner.
 

On 15 February 2024, the Court of Cassation ruled on the application of an exclusion clause for gross fault in an car insurance contract. The case concerned a claim resulting from an accident caused by a driver with a blood alcohol level exceeding 0.8 g/l. The driver was the cohabiting partner of the principal insured.

The disputed clause, included in the general terms of the contract, excluded coverage for damages resulting from the insured's gross fault, particularly in cases where the driver was under the influence of alcohol (with a level above 0.8 g/l of blood), intoxicated, or affected by drugs, medications, or substances impairing their ability to control their actions.

Relying on this provision, the insurer refused to indemnify the principal insured, although the latter did not directly cause the accident.

The principal insured protested against this decision, arguing that the clause violated Article 65 LA, which limits the possibility of denying an insured person their entitlement to a benefit only in cases of breach of a clearly defined obligation in the contract, and only if the breach has a direct connection to the occurrence of the incident.

On appeal, the court upheld the insurer's refusal of coverage, concluding that the exclusion clause was consistent with Article 65 IA. According to the court of appeal, under Article 62 of the same law, the insurer can exclude coverage in cases of gross fault, provided that these cases are expressly and restrictively defined in the contract. The disputed clause sufficiently stated that the intoxicated state of a driver, even one other than the principal insured, could justify an exclusion of coverage if the behaviour was causally linked to the accident.

The Court of Appeal therefore concluded that the insurer could lawfully refuse coverage without demonstrating that the principal insured had committed a gross fault.

However, the Court of Cassation overruled the decision of the Court of Appeal, affirming that under Article 62, paragraph 2 IA, only a gross fault personally attributable to the insured can justify the exclusion of coverage. Therefore, an insured who did not commit a gross fault remains covered, even if another insured person committed a gross fault related to the same incident.

The Court also stated that the Court of Appeal, in concluding that the insurer could refuse coverage without demonstrating that the claimant had themselves committed a gross fault, in accordance with the provisions of the general terms, had not properly reasoned its decision in law.

In a ruling of 17 May  2024, the Court of Cassation clarified the conditions for the nullity of an insurance contract in the case of false declarations or omissions in the risk declaration by the insured.

The facts of the case were as follows: in 2014, the insured took out home insurance for a chalet, failing to declare essential details such as the true age of the property, a prior arson incident, and the exact nature of the property.

These inaccuracies led the insurer to request the cancellation of the contract, citing Articles 58, paragraph 1, and 59 IA, which impose on the insured the obligation to declare all known circumstances that could reasonably influence the insurer's risk assessment.

On appeal, the Court of Appeal of Mons concluded that the omissions and inaccuracies constituted intentional fraud. Therefore, it declared the contract null and void under Article 59 LA, which allows the cancellation of coverage in cases of intentionally false or incomplete declarations.

The insured, contesting this decision, filed an appeal, arguing that the Court of Appeal had not properly assessed the evidence necessary to establish the intention behind their actions.

In its ruling of 17 May 2024, the Court of Cassation overturned the Court of Appeal's decision. It reiterated the principles governing the nullity of an insurance contract for false declarations or omissions, specifying that:

• Article 58, paragraph 1 IA, requires the insured to declare all circumstances known to them and reasonably considered by them to influence the insurer's risk assessment.
• However, under Article 59, paragraph 1, of the law, the contract can only be annulled in the case of intentional false declarations or omissions. The judge assesses the intentionality of omissions or inaccuracies based on all the circumstances of the case.

The Court held that, although the omitted or inaccurate information may have influenced the insurer's risk assessment, there was no evidence that the insured had acted fraudulently or intentionally. The Court of Appeal’s assessment of the evidence was thus found insufficient to justify such a conclusion.
 

Under Article 88, §1 IA, the limitation period for any action arising from an insurance contract is three years (formerly Article 34, §1 of the law on land insurance contracts).

In a ruling of 30 September 2024, the Court of Cassation clarified that an action for pre-contractual liability, aimed at sanctioning a failure to fulfil obligations prior to the conclusion of the contract (in this case, the obligation of information), does not constitute an action "arising from the insurance contract" within the meaning of this provision.

On appeal, it was ruled that a claim for compensation based on a breach of the pre-contractual duty of information, relying on Article 1382 of the former Civil Code, was subject to extracontractual liability. This action, not related to the insurance contract, fell outside the three-year limitation period under Article 88, §1, and was subject to the five-year limitation period set by Article 2262bis, §1, second paragraph, of the former Civil Code.

The insurance company, contesting this interpretation, filed an appeal, arguing that an action based on Articles 1382 and 1383 of the former Civil Code, aiming to repair harm caused by a failure in pre-contractual information, indirectly concerned the existence of the insurance contract and the obligations arising from it. It argued for the application of the three-year limitation period for actions related to the insurance contract (88§1 IA).

However, the Court of Cassation confirmed the Court of Appeal's analysis. It reminded that:

• The three-year prescription period applies only to actions directly related to the existence of the insurance contract and its obligations, regardless of the legal basis on which the action is based.
• An action for pre-contractual liability, based on failures prior to the contract's conclusion, is not an action "arising from the insurance contract."

Therefore, such an action is subject to the five-year prescription period applicable to extracontractual liabilities.

The appeal was therefore rejected.