Context and subject matter of the judgment
The judgment arises from a dispute concerning healthcare civil liability due to medical malpractice, where one of the issues at stake is the maximum amount for which insurers are liable in accordance with the terms of the policy.
The key point is the coexistence of two clearly distinct limits:
- General limit per claim (total sum insured)
- Sub-limit per victim (lower amount applicable to each injured party)
The essential question is to determine whether sub-limits are clauses delimiting risk or clauses limiting rights.
Ultimately, the aim is to ascertain the applicable legal regime, its validity, and its enforceability against the injured party.
Supreme Court doctrine: There is a key distinction between limit and sub-limit
The Supreme Court establishes a fundamental distinction:
a) Limit per claim
-
- It is a risk-delimiting clause
- It defines the scope of the insurance (what it covers and up to what amount)
- It is fully valid without any special requirements
b) Sub-limit per victim
-
- It is a rights-limiting clause
- It reduces compensation within a risk already covered
- It does not define the risk, but rather restricts the right to compensation
The main legal consequence is that, as it is classified as a limiting clause, the sub-limit is subject to Article 3 of the Insurance Contracts Act (ICA), which means that the following requirements must be met:
- Clear and precise wording
- Special highlighting in the policy
- Express written acceptance by the policyholder
The consequence of failing to meet these requirements is that the limit is NOT enforceable against the insured or the injured third party.
I shall now discuss the effects of the judgment on insurance practice:
The judgment consolidates a doctrine which:
- Breaks with the usual practice of including sub-limits without strict formalities.
- Reinforces the distinction between: Delimitation of risk and limitation of rights.
All this has an impact on policies, as insurers must:
- Review the wording of policies
- Clearly highlight sub-limits
- Obtain the policyholder’s express signature
The consequence of failing to comply with these guidelines is that the sub-limit may be rendered ineffective, with the higher general limit applying.
This Supreme Court ruling aims to strengthen protection for the injured party, preventing reductions in compensation, ensuring greater transparency and promoting full redress for the damage. In practice:
For insurers, this entails a greater administrative burden, a risk that standard clauses may be rendered ineffective, and a possible increase in premiums.
For policyholders/insured parties, it entails greater contractual protection and a need to pay closer attention to the terms and conditions of policies.
For the courts, it provides clearer criteria for resolving disputes and reduces interpretative litigation.
Weighing up the implications of this ruling, I believe it contributes to:
- Conceptual clarity (delimitation vs limitation)
- Enhanced contractual transparency
- Protection of the aggrieved third party
However, in my view, there are other more debatable aspects, as it may lead to excessive rigidity in the insurance market and increase the administrative burden in complex contracts, as well as potentially having an economic impact, resulting in higher insurance costs.
Conclusion
Consequently, in its ruling, the Supreme Court has facilitated the courts’ interpretation of the distinction between clauses delimiting risk and those limiting liability, and has increased the protection afforded to the insured.
In some cases, such as complex contracts, this may lead to greater rigidity in contracting and an increase in premiums.
At Belzuz Abogados S.L.P., as a firm specialising in Insurance Law and Civil Liability, we are available to advise you on the impact of this reform, both from the perspective of insurance practice and in the defence of the interests of victims and policyholders.