Valencia Territorial Court, judgment of 16 May 2017, the consequences of an insured’s contribution to his own loss
An insured contacted a multi-tied agent to take out an insurance policy covering trucks for business use. Several years later, the agent proposed that the insured take out new policies with two other insurers, which it considered offered more advantageous terms than the original policy. However, the agent failed to inform the first insurance company that its client wished to terminate his policy and, as a result, the insured continued to pay it the premium for that policy – in addition to the other two premiums owed under the new policies – for a period of five years. After this period of time had elapsed, the client became aware of the double payment and sued the intermediary for not having requested termination of the first policy.
The appellate court held that the multi-tied agent had been negligent not to request that the first insurer terminate the original policy taken out, especially since it should have been aware of this error since it continued to receive commissions under that policy. However, the court found that the insured, an experienced professional, had also been negligent because he had failed to verify his accounts, which should have enabled him to ascertain that a duplicate payment of premiums was being made for the same risk over a long period of time. Therefore, the court held the insured liable for 60% of the loss and limited his claim against the multi-tied agent to only 40% of the sums at issue.
In this case, the Spanish court highlights the fact that the duty to inform and advise incumbent on the intermediary may be limited in certain circumstances, in particular for commercial policyholders and takes out insurance policies to meet the needs of his business. The insured must be careful not to be negligent in contributing to his own loss, as was the case here.