Recent case law of the Supreme Court on the Insurance Act 2014: an overview

Article 142, §1 of the Insurance Act stipulates that the insurance policy covers the damage occurred during the term of the agreement and extends to claims submitted after the end of this agreement. The insurer is thus obliged to cover when the damage occurs during the term of the insurance agreement. In its decision of 25 February 2020, the Supreme Court ruled on the exact moment of occurrence of the damage.

In this case, the insured, a doctor-specialist, caused the decease of the victim by withholding critical information about the development of a tumor for years. The legal successors of the deceased patient held the doctor-specialist liable for the damage they suffered as a result of the decease. The question arose whether the professional liability insurer of the doctor-specialist should cover this damage. Therefore, it was necessary to determine whether the damage had occurred within the insured period or not.

The appellate court established that the period in which the victim could make a correlation between the complaints and the preliminary mistakes of the doctor, i.e. mid 2009 - August 2010, falls within the period that the insurer provided coverage for the liability of the insured. However, the actual decease occurred on 5 February 2013, this is after the final date on which the insurance was obliged to provide coverage (i.e. 31 December 2010).

On 25 February 2020, the Supreme Court annulled the decision of the Court of Appeal by considering another moment to be the occurrence of the damage. According to the Supreme Court, the damage occurred at the time of decease, whereas the appellate court considered that the damage already manifested itself during the period in which the patient was able to establish a correlation between her health complaints and the preliminary mistakes of the doctor-specialist.

Article 153, §5 of the Insurance Act provides that, if the proceedings is brought against the insured before a criminal court, the insurer may be involved by the injured party or by the insured or may intervene voluntarily under the same conditions as if the claim had been brought before a civil court. An insurer can therefore intervene (voluntarily) in both civil and criminal proceedings.

In this case, the insurer, who intervened in criminal proceedings voluntarily, was ordered on appeal to pay a procedural indemnity fee. The procedural indemnity fee is a limited contribution to the costs and fees of the counsel of the successful party. It is at the expense of the party that is found to be in the wrong (art. 1022 of the Judicial Code). 

The insurer did not agree with this conviction. Pursuant to article 162bis, section 1 of the Code of Criminal Proceedings, any conviction pronounced against the accused and/or against persons carrying civil liability for the offence, condemns them to pay the procedural indemnity to the civil party. The insurer argued that it was neither the accused party, neither the party to be held liable.

The Supreme Court rejected the aforementioned appeal in its decision of 3 March 2020. It ruled that an insurance company that intervenes voluntarily in the proceedings before the civil court and is found to be in the wrong may be ordered to pay the procedural indemnity fee. Since the insurer may be involved under the same conditions before a criminal court, the aforementioned article 153, §5 of the Insurance Act, notwithstanding the wording of article 162bis, section 1 of the Code of Criminal Proceedings, makes it possible for a criminal court to order the insurer of the accused, who has voluntarily intervened and who was found to be in the wrong, to pay a procedural indemnity fee.

Pursuant to article 62, section 2 of the Insurance Act, the insurer covers the damage caused by the negligence, even the gross negligence, of the policyholder, the insured or the beneficiary. However, the insurer may release itself from its obligations by stipulating exclusions grounds for gross negligence, which is to be defined very precisely. This provision thus precludes the insurer from releasing himself from his obligations in cases of gross negligence stated in general terms.

The liability insurer had provided for an exclusion in the policy for "serious misconduct". Serious misconduct was a.o. qualified as: "any shortcoming to comply with laws, rules or customs specific to the insured activity in which it must be clear to any person familiar with the subject matter that damage must almost inevitably occur as a result. This includes a.o. the manifest failure to collect taxes, contributions or other charges".

The Court of Appeal ruled that the mere addition that it could concern a.o. the "manifest failure to collect taxes, contributions or other charges" does not alter the fact that it is still formulated too generally. Such provision would not have made it possible to delineate with sufficient precision the conduct that is the cause of a serious misconduct and which is excluded from coverage. The insured would not be able to define which precise conduct is excluded from coverage.

The insurer did not agree with this and argued that the addition that it could concern a.o. "the manifest failure to collect taxes, contributions or other charges" specified the exclusion sufficiently.
On 4 June 2020, the Supreme Court rejected the appeal of the insurer and confirmed that an insurer cannot release itself from its obligations under the policy for cases of gross negligence formulated in general terms.

Article 58 of the Insurance Act requires the policyholder, at the time of concluding the agreement, to disclose accurately all circumstances of which he is aware and which he must reasonably consider to be of such a nature as to affect the assessment of the insurer of the risk. However, he must not communicate to the insurer any circumstances the latter already knew or should have known.

An insurance agreement is null if the concealment or deliberate incorrect communication of information about the risk misleads the insurer in the assessment of that risk (article 59, section 1 of the Insurance Act).

However, the insurance agreement will only be null if the deliberate concealment or communication of incorrect information relates to information relevant to the assessment of the insured risk. Article 66, section 3 of the Insurance Act, which applies to combined policies, stipulates that the ground of nullity does not apply to the entire insurance agreement.

This means that, if the insurance agreement covers several risks (combined policy) and the concealment or deliberate communication of incorrect information only affects one or a few of these risks, the insurance agreement is only null with regard to the risks in respect of which the insurer was deliberately misled. Only when the concealment or the incorrect communication affects all of the insured risks, the insurance agreement may be declared null in its entirety.

The Supreme Court recalls these principles of the nullity of the combined policy in its decision of 7 September 2020. In this case, the insured took out a property insurance, including the fire risk and household contents insurance. It was therefore a combined policy. He did not inform the insurer of the illegal and irregular character of the wooden chalet. This chalet had been established without any urban planning permit, neither could it be regularized. 

The Supreme Court ruled that "the appellate judges who annul the entire insurance agreement without verifying whether the fraudulent concealment of information (in this case of the illegal and irregular character of the wooden chalet) affected the assessment of all insured risks, do not justify their decision according to the law".

Courts must therefore verify whether the fraudulent concealment or the incorrect communication of information affects the assessment of all insured risks, before annulling the combined insurance policy as a whole.