More transparency in insurance contracts. The scrutiny of the Court of Justice, Case C-96/14 , focuses on policies that are increasingly offered to cover loan or mortgage instalments in the event of death or injury. In such cases, the judges observe, the duty of clarity must be doubled, since the consumer’s level of attention is normally lower than when taking out the policy separately.
The facts – The case concerns a French citizen who had taken out a mortgage of almost EUR 70,000, also subscribing to a policy guaranteeing cover of 75% of the instalments in the event of total incapacity for work. Having actually found himself in a condition of 72% partial permanent incapacity, however, he had not obtained insurance cover because, according to the company, he could still have carried out a part-time activity. Hence the court action seeking a declaration that the clause was unfair under Directive 93/13/EEC.
The reasoning – The CJEU begins by noting that in insurance contracts, clauses that define or delimit the insured risk are not subject to an assessment of whether they are unfair, because those limits are taken into account in calculating the premium paid by the consumer. It is therefore not excluded that the clause at issue concerns the very subject matter of the contract. In such cases it will be for the national court, “taking into account the nature, the general scheme and the stipulations of the contract, as well as its legal and factual context, to determine whether the clause lays down an essential element of the contractual whole in which it is inscribed”.
The Court then recalls that the duty of transparency cannot be limited solely to comprehensibility on the formal and grammatical level but must be interpreted broadly. Accordingly, in this case, it is not excluded that the scope of the clause defining the notion of incapacity was not understood by the consumer, “in the absence of a transparent explanation of the concrete operation of the insurance mechanism relating to the assumption of responsibility for the loan instalments”. Whereas the circumstance that the insurance forms part of a contractual whole including the loan contracts could be “relevant”, since “the consumer cannot be expected to show the same vigilance as to the extent of the risks covered by that insurance contract as could be expected if he had taken out the insurance contract and the loan contracts separately”.
The Court thus declares that “clauses concerning the main subject matter of an insurance contract may be regarded as drafted in plain, intelligible language if they are not only grammatically intelligible to the consumer but also set out transparently the concrete operation of the insurance mechanism having regard to the contractual whole in which they are inscribed, so that the consumer is placed in a position to evaluate, on the basis of clear and intelligible criteria, the consequences which derive from it”. Otherwise, it is then possible for the national court to assess the possible unfairness of the clause.
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