Coverage disputes

What we do

In practice, it frequently occurs that the insured assumes an event is covered by the insurance, while the insurer holds a completely different opinion. Our lawyers have expertise regarding coverage issues and the scope of an insurance policy. The so-called 'primary coverage description' and 'guarantee clauses' in the policy conditions are relevant to coverage issues.

The insurer can be compelled to pay compensation for the damage once the coverage issue has been resolved. Within our practice group, our legal experts and lawyers have the experience and expertise to assess coverage issues in specific situations. Legal advice is provided in this process, and if necessary, legal proceedings can be initiated to enforce compensation for the damage by the insurer.

We have the experience and expertise to assume diverse roles, from advisory services to dispute resolution. We have an experienced team of lawyers and legal experts in insurance law. Contact us to discuss the possibilities.

What is a coverage dispute?

A coverage dispute arises as soon as you and your insurer disagree on whether a loss falls under the policy. The policyholder assumes that the event is covered; the insurer rejects the claim (partially) by invoking the policy conditions. The core issue is almost always interpretation: how should the description of coverage, the exclusions, and the special clauses be read in this specific situation? This does not involve a literal linguistic interpretation, but rather the so-called Haviltex standard: what could the parties reasonably expect from one another? Moreover, in the case of consumer policies, it carries significant weight that unclear provisions are interpreted in favor of the insured (contra proferentem).

The stakes are concrete: will you be compensated for the damage, or will you be left with the costs? For an international group, this could involve a multi-million euro interest under a business interruption or liability policy; for the baker on the corner, it concerns the replacement of a burnt-out oven that threatens his continued existence. In both cases, the same legal questions apply.

Common causes of coverage disputes

Most disputes revolve around a limited number of recurring themes:

• Exclusions and clauses – the insurer invokes an exclusion or a guarantee/prevention clause (for example, a burglary, fire, or maintenance regulation).
• Duty of disclosure at the time of entering into the contract – the insurer claims that information was withheld when the policy was concluded (Article 7:928 of the Dutch Civil Code).
• Duty to report and cooperate following damage – discussion as to whether the damage was reported in a timely and correct manner (Article 7:941 of the Dutch Civil Code).
• Intent or recklessness – the insurer alleges that the insured caused the damage intentionally or through recklessness (Article 7:952 of the Dutch Civil Code).
• Underinsurance and deductible – the amount of the payout is in dispute because the insured sum is allegedly too low.

Exclusions, warranty clauses and reasonableness and fairness

For a long time, a sharp distinction was made in insurance law between the primary coverage description (the outer limit of what is insured at all) and the preventive guarantee clause (a requirement that the insured must comply with to maintain coverage). There was virtually no recourse against invoking a primary coverage description, whereas a claim based on a guarantee clause could more easily be disregarded. The Supreme Court has abandoned that rigid distinction: whether the insurer's reliance on a policy clause is unacceptable in the given circumstances according to standards of reasonableness and fairness is now assessed by the same yardstick as for other contracts (Article 6:248 paragraph 2 of the Dutch Civil Code).

That test is restrictive – an insurer may, in principle, rely on the limits of its coverage – but it is not without merit. The substantive playing out of the circumstances of the case (the connection between the violated provision and the damage, the seriousness of the misconduct, the insurer's interest) determines the outcome. It is precisely at this intersection of policy interpretation and reasonableness that our lawyers and (corporate) legal counsel conduct the debate.

Burden of proof and duty to disclose

Who has to prove what is often decisive in a coverage dispute. As a general rule, the insured bears the burden of pleading and proving that the damage falls within the scope of coverage; if the insurer invokes an exclusion, intent, or recklessness (Article 7:952 of the Dutch Civil Code), the burden of proof thereof rests in principle on the insurer. In the event of alleged intent to mislead the insurer—under the duty of disclosure (Article 7:928 of the Dutch Civil Code) or the duty to provide information after damage (Article 7:941, paragraph 5, of the Dutch Civil Code)—the right to payment may lapse entirely. However, the insurer cannot simply rely on a breach: regarding the duty to report, the insurer must have suffered harm to a reasonable interest as a result of the non-compliance. A thorough analysis of the facts, the policy, and the correspondence conducted makes all the difference here.

How we handle a coverage dispute

We first quickly assess whether the rejection is justified: is the insurer's explanation correct, has the right clause been applied, and is the burden of proof distributed correctly? Next, we choose the most effective route. Often, a well-substantiated claim for liability or a reasoned letter to the insurer is sufficient to secure a payout. If that fails, a complaint to the Financial Services Complaints Institute (Kifid) is possible for consumers and small business policyholders, or proceedings before the court. We provide guidance from advice to dispute resolution, with mixed teams of lawyers and in-house counsel – tailored to the case, whether you are a listed company or an entrepreneur working from home.

Frequently asked questions about coverage disputes

My insurer is rejecting the claim. Is it worthwhile to pursue the matter?
Often it is. Rejections are frequently based on a questionable interpretation of the policy or an incorrect distribution of the burden of proof. An independent assessment of the policy conditions and the rejection letter will quickly clarify whether pursuing the matter has a chance of success.

May the insurer invoke any exclusion?
In principle yes, but not without limitation. Invoking a policy clause may be unacceptable in the given circumstances according to standards of reasonableness and fairness (Article 6:248, paragraph 2 of the Dutch Civil Code). This requires a substantive assessment of the facts.

How much does it cost to hire a lawyer or legal expert?
That depends on the nature and scope of the dispute. We make clear agreements in advance regarding the approach and costs, so that you know where you stand before taking further steps.

Part of our insurance law

Coverage disputes are a specialty within our broader Insurance Law. In addition to the question of coverage, is there also a dispute regarding policy conditions, the duty of disclosure, or the duty of care of your insurer or intermediary? Our lawyers and (corporate) legal counsel assist both international corporations and small business owners. Contact us to discuss your situation without obligation.