Judgment of the Antwerp Court of appeal of 28 February 2023 on invalidity of forfeiture clause in the special conditions of a fire insurance policy

A judgment by the Antwerp Court of appeal of 28 February 2023 (Chamber B2E1, civil affairs) highlights the importance of having proof of the notification of the special conditions of an insurance policy. This particular case concerns a fire insurance policy taken out by a company and the fire prevention requirements that form part of the special conditions. Only the time of the conclusion of the policy is decisive in determining whether the policyholder had or should have had knowledge of the requisite fire safety measures as part of the special conditions of the insurance contract. The Court ruled that it cannot be demonstrated here that the forfeiture clause for non-compliance with fire prevention conditions forms part of the special conditions of the contract. In addition, the clause is not legally valid because its wording is too general and not sufficiently clear.

A company and its managers appealed a judgment by the Antwerp Enterprise Court of 27 April 2021, in a case pitting them against their fire insurer and the broker who sold them the insurance policy: invoking a forfeiture clause for non-compliance with fire safety measures referenced in the policy’s special conditions, the insurer declined to cover the damage resulting from a fire in the factory hall (showroom and workshop) that occurred on 15 February 2019, as the sawdust in one of the plastic waste collection bags of the dust and waste extraction system caught fire by spontaneous combustion, laying waste to the entire wood-filled hall. The contested insurance policy was taken out on 17 September 2015, when the company manager’s existing household fire insurance policy concluded back in 2014 was converted into commercial fire insurance covering several free-standing buildings plus inventory. The insurer was not able to present a copy of the insurance proposal; apparently no signed copy of the contract including the special conditions exists, nor is there proof that the price quote dated 7 September 2015 (the first concrete trace of any mention of fire safety conditions) was ever forwarded to the insured. Three addenda to the fire insurance policy were issued in 2016-17, relating to an extension of coverage and other adjustments. Whereas the updated policies did refer to them, this does not constitute proof of the insured’s assent to the fire prevention conditions, as the addenda were unrelated and there was thus no need to review the policy conditions, which remained unchanged. The Court therefore ruled that it has not been demonstrated that the exclusion clause forms part of the special conditions agreed by the parties. Moreover, the Court argued that the invoked clause is in any case not legally binding: being worded in rather general terms, it fails to clarify exactly which fire prevention measures need to be taken on-site in relation to the installed dust extraction system. Hence there are no grounds to invoke exclusion, and the damage caused by the fire is eligible for compensation in accordance with the applicable coverage and limits under the policy; qualified experts are to be charged with an assessment of the damages.

Moral of the story: it is crucial not only to draft clear, detailed and unambiguous special conditions, but also to conserve proof of the parties’ agreement to these conditions at the time of signature – only the signed policy including the relevant special conditions constitutes definitive proof that these form part of the agreement.

Judgment not published.

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