1.What did this decision of the Supreme Court provide?

This decision (SC 210/2023) provided for the exemption of the insurance company from paying compensation to the insured for the theft of his car due to the particular circumstances under which the theft occurred: specifically, the insured used to park his car on a remote, unlit road at night, in an area where there was a high probability of theft. For this reason, when the car was eventually stolen and the insured requested the insurance company to pay him the due compensation, it refused on the grounds that parking the car on an unlit road at night constituted ‘gross negligence’, which, under insurance law, results in the exemption of the insurer from paying compensation. The Supreme Court’s decision affirmed the previous decisions in the 1st and 2nd instance, which had been issued for this specific case.

2.What is ”excessive negligence” in insurance law?

This is a term often included in insurance contracts, which stipulates that, in certain circumstances, the insurer shall not be liable to pay compensation for the damage suffered by the insured, because the insured did not exercise the necessary care expected from an average person in their daily dealings. In other words, if the insured had acted more carefully, they could have prevented the risk or at least limited the damage.

It has been ruled by Greek courts that excessive negligence includes forgetting the keys in the car’s ignition and moving away from it, repeatedly leaving it unlocked, parking the car in an illegal/blind spot where it could easily be hit by passing vehicles, etc.

3.When should I inform the insurer?

The rule in car insurance is that the insured is obliged to notify the insurer immediately and without undue delay of any accidents that occurred to their vehicle. They must do so within 8 days from when they became aware of the accident. At the same time, they must provide the insurer with all necessary documents to prove the accident and the damage (e.g., the police report).

If the insured fails to comply with the above obligation we mentioned, they will be sentenced by the court to compensate the insurer up to €2,000. Furthermore, the insurer may also terminate the contract with the insured, especially if they have reserved the right to do so in the contract (in practice, this always happens).

4.When is the premium adjusted?

In several cases, the amount of the premium paid by the insured may not be beneficial for them based on the relevant conditions. After all, the premium is derived from relevant questions posed by the insurer to the insured before the conclusion of the contract, based on the insured’s history. For example, a different premium will be charged to a driver who has never caused a car accident compared to someone who has caused 5 accidents in the last 3 years.

If the circumstances change, the insured can request the adjustment of the premium from their insurer (usually downwards). For this reason, the period during which the insured continues to pay the premiums will be taken into account, as well as whether they are justified by the situation that has arisen. Given that car insurance is mandatory by law with a minimum coverage, a high premium would be disproportionate for an insured who has retired and no longer uses their car, which remains unused for years.

5.When is the insurer exempt from compensation?

The law provides for certain reasons that, if present, allow the insurer not to pay compensation to the insured for the damage they suffered from the accident. Specifically, the insurer is exempt when:

• The driver of the car did not have a driver’s license or at least one required for the category of their vehicle.
• The driver had consumed a large amount of alcohol or toxic substances which had a decisive impact on causing the accident.
• The car that caused the accident was used for a different purpose than that stated in the vehicle registration (e.g., a private car used as a commercial vehicle for furniture removals).
• Other exceptions may be provided for in the insurance contract, but they must not make it particularly difficult/impossible for the insured to assert their claims.

In any case, it is important to know that the insurer is always responsible for compensating the third party, and likewise the third party can turn against the insurer to claim the due compensation regardless of whether the exceptions mentioned above apply. Therefore, it is irrelevant for the third party who suffered the damage what happens in the internal relationship between the insurer and the insured.

6.What does compulsory car insurance cover?

Although many people may not know it or may at least not have clear concepts in their minds, if we wanted to put it simply, we would say the following: With the insurance contract, the minimum coverage provided by the insurer covers the damage caused to a third party by our car (which may be driven by the owner or any other person designated as responsible for driving that particular car).

The insurance coverage includes accidents resulting in the death/injury of the insured as well as the damages they suffered. However, the insurance does not cover the items we transport ourselves with our car, e.g., a laptop if it is destroyed in the collision.

In case the insured wishes to cover their own material damages from the accident, they must choose a higher insurance package than the minimum required by law, which is commonly referred to as “comprehensive insurance.” A characteristic of this is that in the event of an accident, the insured is compensated by the insurer (provided there are no coverage exceptions) for the material damages suffered from the accident.

7.What is over insurance?

Suppose the insured has a car worth €15,000. The rule in insurance law (especially in car insurance) is that the insurance value (both real and declared) are the same, i.e., they coincide. Therefore, in this case, the insurance contract must have a value of €15,000, which is the (current) value of the car. However, if the insured declared a higher insurance value than the actual one (stating that the car is worth €25,000 when it is worth €15,000), we speak of over insurance, and there are 2 possibilities:

If the insured knew that the car was of lower value and deliberately declared a higher amount, then the insurance contract is void, and the insurer is entitled to retain the premiums received in the meantime from the insured = they do not refund them.

If the insured was not aware of the above and acted out of negligence, the contract remains valid, and both parties (insurer and insured) retain the right to request a reduction in the insurance value (the amount the insurer will pay if the risk occurs) as well as a reduction in the premium paid by the insured to correspond to the actual situation.

8.And what is underinsurance?

As mentioned, a little earlier, underinsurance is the opposite phenomenon, where the insured declares a lower insurance value than the actual value (for example, if the car is worth €15,000, they insure it for €8,000). Usually, this happens so that the client ends up paying lower premiums, considering that the insurance risk (e.g., causing a collision with their car) is less likely to occur in their case.

Unlike over insurance, the insurance contract remains valid here. The parties simply retain the right to adjust the premium and the insurance value to the actual value (they may have reserved other rights for themselves through the contract, such as termination for the future, etc.).

9.Are you familiar with the Auxiliary Fund?

Have you ever encountered a situation where the driver of the car that caused an accident did not have a driver’s license? Seeing these developments, the Greek legislator introduced the institution of the Auxiliary Fund. This is a legal entity in which all insurers based in Greece participate, contributing fees to create a “financial reserve” that is used as compensation in the following cases:

• When the driver who crashed into me remains unknown.
• When the car involved in the collision was uninsured.
• When the other party’s insurance company has gone bankrupt/had its license revoked, and therefore I cannot seek compensation from them.
• When the collision occurs with a vehicle exempt from compulsory insurance (such as government vehicles like buses).

It is worth noting that in order to compensate for the material damages suffered by my car from the collision, there must also be significant bodily injuries to the insured confirmed by the police, and the insured themselves must have stayed in a public hospital/private clinic for at least 5 days.

Finally, in the event of someone’s death in the accident, the amount of mental anguish compensation entitled to the deceased’s relatives by law, which will ultimately be paid by the Auxiliary Fund, cannot exceed €6,000 per beneficiary.

10.”What should I take away from all this?

Based on all that was mentioned above, the most important points to keep in mind are the following:

• Insurance law, especially regarding car insurance, is constantly evolving and court decisions can influence its application. It is important to follow these developments.
• The recent decision of the Supreme Court that seriously addressed the act of parking a car in a poorly lit street highlights the trend of courts to strictly enforce the laws, even at the expense of the insured.
• It is important to carefully examine the terms of the insurance contract before signing it, in order to avoid any “hidden” exclusions set by the insurer. If in doubt, it is always good to seek the opinion of a legal professional.

 

Next to the client and his needs.

Athina Kontogianni-Lawyer

 

The above-mentioned does not constitute legal advice, and no responsibility is taken for it. For more information, please contact us.