Insurance matter resurfaces following a six-month lapse.
In a landmark ruling on July 14, 2021 (Case No. IV ZR 153/20), the Federal Court of Justice (BGH) in Germany clarified the timing of the insurance event in a disability insurance (DI) case. According to the BGH, the insurance event typically occurs when the insured becomes disabled as defined by the insurance contract, marking the start of entitlement to benefits.
The BGH's ruling emphasises that the insurance event's timing is crucial for determining when coverage and benefits can retroactively apply. For example, if the insured became disabled before the claim is filed but within the insured period, the insurance event date is when the disability actually commenced, not the claim date. This means the insurance benefits can be paid retroactively to the onset of the disability, provided it falls under the terms and conditions of the contract and the insured fulfills any required notification periods.
The BGH's general legal approach in insurance cases is that entitlement arises only when the material facts constituting the insurance event objectively exist, not merely when discovered or claimed. This principle affects time limitation and the effective start of retroactive insurance coverage, aligning with German insurance law principles found in the Bürgerliches Gesetzbuch (BGB).
In a recent case, a plaintiff applied for a disability pension in December 2016. The plaintiff had suffered a work accident on July 29, 2016, and has not been able to work since. On October 11 of the same year, the plaintiff demanded that his insurance double the insurance coverage, i.e., the disability pension. The DI confirmed this to him in writing on October 18, 2016, effective November 1. However, the DI initially paid 500 euros per month, which was the agreed-upon amount before the BGH ruling.
The BGH's clarification means that the plaintiff is entitled to 1,000 euros per month as DI pension instead of 500 euros. The plaintiff's lawsuit was initially rejected by the Regional Court of Berlin and the Higher Regional Court before being successful before the BGH. The disability pension was approved by the DI in September 2017.
The BGH's ruling also clarified that the insurance event "disability" has two alternatives: one requiring a retrospective view and the other directed towards the future. The first alternative requires a retrospective view, which is only possible after the end of the six-month period. The second alternative is directed towards the future.
This interpretation ensures that insured persons can benefit from coverage even if claims are filed later, as long as the event occurred within the insurance period and claim rules are followed. The BGH's ruling provides clarity and certainty for both insured persons and insurance companies in disability insurance cases.
The BGH's decision on the timing of the insurance event in a disability insurance case highlights the significance of this determination for the retroactive application of coverage and benefits, even in cases where the claim is filed after the onset of disability. Consequently, other business sectors, such as finance, may need to carefully consider the implications of the BGH's ruling when managing insurance claims.
Moreover, the BGH's interpretation of the insurance event "disability" as having two alternatives - one retrospective and the other future-oriented - can influence how insurance companies approach claim processing, offering potential opportunities for insured persons to receive coverage for events that occurred within their insurance period, even if the claim is filed at a later date.
