No legal protection in exceptional situations? VKI complains.

11/23/2020 – Citing an exceptional situation clause, the defendant insurer rejected legal protection for various lawsuits relating to Covid-19. The Association for Consumer Information has now complained that this clause is grossly disadvantageous, non-transparent and therefore prohibited. The Commercial Court of Vienna largely agreed with his argument.

The Association for Consumer Information (VKI) as an association entitled to sue within the meaning of the Consumer Protection Act has brought an action against the “exceptional situation clause” in the general terms and conditions for legal protection insurance of a large Austrian insurer at the Vienna Commercial Court.

The clause basically excludes the safeguarding of legal interests “in direct or indirect connection with sovereign orders which are directed to a majority of persons due to an exceptional situation”.

In the course of the Covid-19 pandemic, there were several complaints from consumers that legal protection insurances had refused cover for example in the event of travel cancellations, flight cancellations or event cancellations due to this clause, according to the VKI.

Reminder ineffective

At the beginning of May, the VKI had warned the insurer and requested a declaration of discontinuance; but which was not submitted.

He then sued for the omission of their use in general terms and conditions and in contract forms as well as an appeal to these or equivalent clauses. The provision violates legal prohibitions and good morals, is grossly disadvantageous and non-transparent.

The VKI also applied for the judgment to be published in the Kronen-Zeitung within six months of becoming legally binding. There is an interest in clarification and it is important to reach as many policyholders as possible whose contracts contain the incriminated clause.

Too large a gap in insurance coverage

The court largely endorsed the VKI’s reasoning. According to current case law, not every connection, no matter how distant, with a sovereign order should not be covered by a risk exclusion.

There must be a causal connection between the sovereign order and the legal interests that should be covered by the insurance.

According to the court, the word sequence “in direct or indirect connection with a sovereign order” can only be interpreted in such a way that it covers all connections with a sovereign order.

In the present case, there is therefore an “inappropriately wide gap in insurance coverage”, so the clause is grossly disadvantageous.

Terms too vague

In addition, the clause is not transparent. The term “sovereign orders” does not make it clear whether only laws or also acts of enforcement (such as ordinances, decrees, notices), government recommendations or orders from foreign authorities are included.

The term “exceptional situation” is just as unclear, for which there is no uniform meaning in common usage. In the case of the “most customer-hostile interpretation”, any deviation from the normal situation could be affected; the insurer could define this in individual cases.

The fact that “sovereign orders” according to the clause are issued to a majority of people and must be imposed in an “exceptional situation” does not yet sufficiently define them. The terms are in themselves too vague.

In addition, by combining the terms “direct” and “indirect”, the insurer creates a comprehensive exclusion; This is not, as the insurer claims, a matter of two independent areas of regulation, but of a uniform clause.

Insurer’s point of view

The defendant insurer had argued that the obligation to formulate the content of the clause in a clear and understandable way existed only to the extent possible. There is no requirement that complex content should not be the subject of general terms and conditions.

An “ideal” transparency is not necessary, sufficient transparency is sufficient. Because of the special nature of the product, it is inevitable to use abstract terms, legal language terms and technical terms.

When considering the entire sentence structure, it must be clear to the consumer that what is meant is the most comprehensive possible exclusion of facts. This means that “failure to recognize a gap in coverage” cannot occur.

Exclusion of risk should also by no means be interpreted further than its purpose requires. In the present case, the clause only serves to exclude matters that occur very rarely from insurance cover; otherwise the premiums would be higher.

Clause needs to be changed

The court did not go into these objections in its findings. The fact that the clause was in use for decades and approved by the Federal Ministry of Finance is also irrelevant.

It has never been examined in court and it is up to the courts to check whether insurance conditions are in accordance with the law. The clause is opaque, grossly disadvantageous and therefore illegal.

In addition, there is a risk of repetition because the insurer has not signed a cease and desist declaration. He was no longer allowed to invoke the inadmissible clause; a period of three months was set for changing the clause. The request for publication was granted.

The verdict is not yet legally binding.

The decision in full text

The decision of the Commercial Court Vienna 30Cg24 / 20m of November 7, 2020 is of the Website of the Association for Consumer Information available in full.

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