UK - England & Wales
(1) When does the limitation period start to run for insurance contract?
The 6 year limitation period starts to run from the date on which the insured's cause of action has accrued. For property insurance, that will be on the occurrence of the insured event. For liability insurance, it is the date when the insured's liability has been "ascertained" ie determined as a precise sum payable by the insured. The existence and amount of the insured's liability is ascertained by a court judgment, arbitration award or settlement agreement.
(2) When does the limitation period start to run for reinsurance contracts?
A number of court decisions over the years have established the mainstream view that the reinsured's cause of action against the reinsurer accrues when its own liability has been established and quantified. There has also been some contrary caselaw, to the effect that the reinsurer's liability arises at the same time as the liability of the original insured.
(3) Can the limitation period be suspended and/or interrupted, and if so, how?
The parties to a (re)insurance contract may contract out of the ordinary limitation rules. Limitation will stop running once proceedings (in court or arbitration, depending on the terms of the contract) are commenced.
The right to plead a time bar defence may be lost where there is an admission of liability. A (re)insurer may also lose the right to plead a time bar by waiver or estoppel. If there is an acknowledgement or part payment, time will start to run again from the date of the acknowledgement or part payment. If there has been fraud, concealment or mistake, time will start to run only from the date when the claimant discovers this, or could with reasonable diligence have discovered it.
(4) Can the express terms of the insurance policy and/or reinsurance contract have the effect of altering the start date for the limitation period?
Yes. In Halvanon Insurance Co Ltd v Companhia de Seguros do Estado Paulo [1995] the Court of Appeal referred to the use of "special clauses" to do this.
Germany
(1) When does the limitation period start to run for insurance contract?
The German Insurance Contract Act (Versicherungsvertragsgesetz, VVG) does not provide any special limitation periods. Thus, the general provisions on limitation periods according to the German Civil Code (Bürgerliches Gesetzbuch, BGB) apply. The standard limitation period pursuant to Sec. 195 Civil Code is three years. In general, pursuant to Sec. 199 Civil Code, this limitation period commences at the end of the year in which
- the claim arose and
- the obligee (the insured) obtained knowledge of the circumstances giving rise to the claim and of the identity of the obligor (the insurer), or would have obtained such knowledge without gross negligence.
(2) When does the limitation period start to run for reinsurance contracts?
Claims arising out of reinsurance contracts also become time-barred after three years. Furthermore, the same rules as for the commencement of the limitation period apply as under insurance contracts (see question 1).
(3) Can the limitation period be suspended and/or interrupted, and if so, how?
The limitation period can either be suspended or recommence. Its suspension has the effect that the time period during suspension is not included in the calculation of the limitation period. There are various grounds and instances when the limitation period will be be suspended. One of the practically most relevant reasons are negotiations between the parties in respect of a claim. In the insurance context, the limitation period also gets suspended when an insurance claim has been registered with the insurer until such time when the insured receives the insurer's coverage decision. Generally, under Sec. 204 Civil Code, the limitation period is also suspended by, eg:
- service of a complaint or of a third-party notice,
- service of an application for evidence to be taken in independent evidentiary proceedings,
- arranging for notice to be given of an application for conciliation filed with a recognised conciliation institution, or
- commencing arbitration proceedings.
Furthermore, a limitation period can recommence. According to Sec. 212 Civil Code, this will be the case if:
- the obligor acknowledges his debt to the obligee, or
- execution is undertaken or applied for.
(4) Can the express terms of the insurance policy and/or reinsurance contract have the effect of altering the start date for the limitation period?
In general, the parties may contractually agree on a different start date for the limitation period (or change the limitation period as such). There are certain restrictions, however, eg in case of claims for intentional wrongdoings. Furthermore, modifications in standard business terms will be subject to comparatively strict legal scrutiny, see Sec. 307 Civil Code, as to ensure that the other party to the insurance contract is not unfairly disadvantaged.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
