As specialists in Insurance Law, we frequently encounter high‑value claims where the insurer has acknowledged the loss, yet significant discrepancies arise regarding the amount of compensation. To prevent litigation focused solely on the valuation of damages, Article 38 LCS establishes an out‑of‑court process in which an independent third expert issues a binding appraisal.
Before reaching that stage, each party appoints its own expert, who attempt to reach agreement. If they fail to do so, the third expert is then designated. The appraisal issued by this independent expert is final unless the insurer challenges it in court within thirty days, or the insured does so within 180 days.
Although the mechanism may resemble an alternative dispute resolution (ADR) process, and despite potential doubts about whether the parties must use it, the prevailing legal doctrine has consistently clarified that recourse to this procedure is mandatory whenever the only dispute concerns the valuation of the loss.
Judgment No. 161/2025 of the Civil Chamber of the Spanish Supreme Court, dated 30 January (rec. 646/2020; ECLI:ES:TS:2025:442), reiterates this well‑settled understanding: when the legal requirements for applying Article 38 LCS are satisfied, both parties must submit to the expert procedure. The Court states:
“As a general rule, when the necessary conditions are met, the expert procedure under Article 38 LCS is binding. If the statutory requirements indicate that this is the appropriate mechanism for resolving the dispute, neither the insurer nor the policyholder/insured is free to opt for court proceedings instead.”
The same judgment also clarifies which disputes fall outside the scope of Article 38 LCS. The procedure does not apply to:
- Claims that the insurer has fully denied, even if they were reported in time.
- Claims arising under liability insurance, where there is no true disagreement between the insurer and the insured about the damage valuation.
- Disputes that involve legal questions, such as determining whether the loss is covered, or interpreting the terms and scope of the policy.
The Court explains that experts appointed under Article 38 LCS act solely as appraisers in property insurance. Their mandate is limited to evaluating the amount of damage affecting insured assets or rights. They cannot rule on legal issues, the existence of the insured event, the applicability of coverage, or any circumstances influencing the origin or outcome of the loss.
Accordingly, the judgment concludes:
“The parties to an insurance contract are required to resolve their disagreements through the expert procedure set out in Article 38 LCS whenever the insurer has accepted a claim under a damage insurance policy and the sole dispute concerns valuation of the insured assets or rights. The obligation does not apply when the disagreement extends beyond the mere quantification of damage.”
This reasoning aligns with the statutory design of the LCS and reflects broader legislative trends favouring structured out‑of‑court mechanisms for resolving technical valuation disputes.
From the Insurance Law Department at Belzuz Abogados, S.L.P., we remain at your disposal to analyse any matter related to civil liability or insurance, providing professional, efficient, and reliable advice.