The Supreme Court of Lithuania (LAT) in 2024 April 10 recognized in the ruling that the insurer has the right to demand from the policyholder the return of part of the sum paid out by the insurer, when the policyholder has not paid the insurance premium within the time specified in the insurance contract.
Lawyer Renata Jankutė-Timofejenko of the Glimstedt law firm examines the story, which lasted for almost three years.
in 2021 June 14 the parties concluded an insurance contract on the basis of the rules of compulsory insurance of civil liability of vehicle owners. The contract entered into force in 2021. June 18 00:00 The insurance period provided for in the insurance contract is from 2021. June 18 until 2022 June 17
According to the terms of the insurance contract, the insurance premium had to be paid by the date specified in the insurance contract – 2021. June 18 The policyholder (company) did not pay the insurance premium by the term specified in the insurance contract – the premium was paid only in 2021. July 2
The traffic accident occurred in 2021. June 18 Insurer in 2022 August 17 paid out an insurance payment of EUR 3652.69 due to a traffic accident. in 2022 September 22 claim, the insurer applied to the policyholder (company) for 60% payment of the insurance benefit, indicating that the policyholder (company) missed the insurance premium payment terms specified in the insurance contract and did not pay on time for the insurance coverage provided under the insurance contract.
After the policyholder (company) failed to pay the amount specified in the claim, the insurer filed a lawsuit in court, requesting that the policyholder (company) be awarded 100 percent. insurance payment (EUR 3652.69).
“The court of first instance supported the policyholder’s (company) position and rejected the insurer’s claim. The court stated that both the insurer and the policyholder (company) did not completely properly comply with the parties’ duty of cooperation, the fundamental principles of contract performance – the policyholder (company) did not pay the insurance premium on time, and the insurer did not properly explain the legal consequences to the policyholder (company) due to non-payment of this premium in accordance with the established terms.
The court indicated that, if the insurer’s claim is satisfied, the insurer would receive both the insurance premium and recover the entire insurance payment paid for the damage caused, which, in the court’s opinion, would be disproportionate to the violation committed by the policyholder (company), because in this case, in the court’s opinion, the policyholder would lose the insurance the protections provided to him. The insurer, not agreeing with the court’s position, filed an appeal in the case”, says the lawyer of Glimstedt.
Complaints journey through the institutions
The appellate court changed the decision of the first instance court and awarded the insurer 60% from the policyholder (company). part of the paid insurance benefit, ie EUR 2,191.61. The court took into account the provisions of the Law on Compulsory Liability Insurance of Vehicle Operators of the Republic of Lithuania (Article 11, Paragraph 7, Article 22, Paragraph 2), according to which, when deciding the issue of returning the insurance payment (part thereof) to the insurer, it is mandatory to take into account the violation of the established obligations, the cause of the violation the connection with the traffic accident, the amount of damage caused by the violation or non-fulfillment of duties, other significant circumstances. However, the story did not stop here either. As the policyholder (company) did not agree with the latter position of the court, the policyholder (company) filed a cassation appeal in the case.
The court of cassation supported the position of the appellate court, that is, it left the decision of the appellate court unchanged (the insurer was awarded 60% of the paid insurance benefit, ie EUR 2,191.61).
LAT emphasized that, when determining the amount of the amount to be returned to the insurer, the size of the unpaid amount, the duration of the missed deadline, the reasons for the missed deadline and other circumstances that are recognized as significant in the court’s decision in the specific case under consideration may be influenced by the factual circumstances that have arisen individually between the parties.
In the case under consideration, the LAT agreed with the assessment of the appellate authority that 60% awarding the part of the paid insurance benefit (ie EUR 2,191.61) according to the individual circumstances in this case is fair, legal and reasonable.
Evaluating general trends, “Glimstedt” lawyer Renata Jankutė-Timofejenko notes that the essential idea of the practice formed by LAT is clear.
“If it becomes clear that the policyholder has not paid the insurance premium within the time specified in the insurance contract, the insurer has the right to demand from the policyholder the return of all or part of the payment paid by the insurer.
The size of the payment (whether all or part of it) should be returned by the policyholder to the insurer is left to the court to decide, taking into account the factual circumstances that have arisen individually between the parties in a specific case”, says the lawyer and reminds not to forget to pay the insurance premiums on time according to the civil liability of the vehicle owners. compulsory insurance contract.
