Relevant facts and procedural history
On 14 September 2017, the policyholder/insured took out a life insurance policy covering, amongst other things, myocardial infarction, with a sum assured of €50,000. The specific terms and conditions included, within the description of said cover, that the claim would be covered ‘more than 90 days after the effective date of the cover’. The insured suffered a heart attack on 15 November 2017, within that waiting period.
At first instance, Totana Magistrates’ Court No. 4 upheld the claim and ordered the insurer to pay the sum insured plus interest under Article 20 of the Insurance Contracts Act (LCS), on the grounds that the waiting period was a limiting clause that had not been validly incorporated (due to a lack of highlighting and specific acceptance). The Provincial Court of Murcia upheld the judgment in its entirety. The insurer lodged an extraordinary appeal on the grounds of a procedural irregularity (assessment of the evidence) and an appeal on points of law (Article 3 of the Insurance Act and, in the alternative, analogous application of Article 73 of the Insurance Act).
Legal issue and regulatory framework
The judgment essentially addresses two aspects. First, the classification of the waiting period clause: whether it defines the risk (and is subject to the ordinary incorporation regime) or whether it limits the insured’s rights (and requires the dual requirement of Article 3 of the LCS: specific separation and specific written acceptance). Second, the review of the assessment of evidence on the grounds of a procedural irregularity, which is only upheld in exceptional cases where the error is manifest and of constitutional significance (Article 24 of the Spanish Constitution and Article 469(1)(4) of the Civil Procedure Act).
Supreme Court doctrine: delimitation of risk vs. limitation of rights
The Chamber reiterates the classic distinction: delimiting clauses specify the subject matter of the contract (which risks are covered, their scope, duration and field of application), whilst limiting clauses operate ‘once the risk has occurred’ to restrict, condition or modify the insured party’s right to the benefit. A relevant complementary criterion is that of the ‘natural content’ of the contract: a clause will be limiting if, unexpectedly, it departs from the typical or ordinary scope of the cover expected according to insurance practice and the policy’s own structure.
On that basis, the Supreme Court considers the 90-day waiting period for heart attacks in a renewable annual life insurance policy to be “clearly” of a limiting nature: this is a form of cover expressly included (even highlighted on the first page alongside the sum assured) from which an initial, time- y period is deducted. The Chamber classifies this technique as a “surprising” limitation on the typical content of life insurance, meaning that its validity requires the cumulative fulfilment of the formal requirements of Article 3 of the Insurance Contracts Act (LCS).
The scrutiny of Article 3 of the Insurance Contracts Act: special highlighting and specific acceptance
The judgment confirms the lower court’s assessment regarding non-compliance with Article 3 of the LCS. In particular, it highlights two practical points:
- Ineffective highlighting: although the 90-day period appears in bold, the policy uses this same typographical device extensively (headings, incompatibilities, exclusions and other passages), so that the highlighting ‘loses’ its function of drawing attention. Added to this is the small font size on the pages where the waiting period appears, making it difficult to read.
- Acceptance not specifically referred to: the policyholder’s signature appears several pages later, in a generic acceptance text covering multiple sections, without clear identification of the waiting period clause. The Chamber also considers the multitude of signed documents, which dilutes the actual awareness of which limiting clauses were being accepted.
The usual questions
It appears that, in this case, the drafting of the policy clauses involved an excessive use of bold type, highlighting things that, a priori, were not necessary. However, it should not be overlooked that the heading under which the clause was inserted was indeed particularly highlighted and that the policyholder’s signature appeared on several pages. When analysing these judgments, one cannot help but wonder: how many times should the policyholder have signed? 3, 5, 16?; what font size should the exclusions of cover have been? In addition to bold type, should the clauses have been underlined? And should a different colour have been used, such as red, for example?
These are questions that may seem laughable, but when reading these judgments, one always finds that the High Court fails to confirm, in a clear and definitive manner, what is valid, because it always points out what is NOT valid. It rules in the negative rather than the positive.
Furthermore, did the Chamber not tell us in its judgment of 22 December 2008 (RJ 2009, 161, RC 1555/2003) that this Chamber has never required a signature for each of the limiting clauses?
Judgment and practical consequences
The Chamber dismisses both appeals and upholds the order requiring the insurer to pay the insured sum (€50,000) and default interest under Article 20 of the Insurance Contracts Act from the date of the incident, as well as ordering the insurer to pay the costs of the appeals and declaring the deposits forfeited. The practical consequence is clear: if the waiting period clause is a limitation clause and does not contravene Article 3 of the Insurance Act, it cannot be enforced against the insured.
At the Insurance Department of Belzuz Abogados, S.L.P., as specialists in Medical Malpractice and Insurance Law, we consider this judgment to be of particular relevance to lawyers, insurers, healthcare professionals and hospital managers.