Insurance against company closure: Are the high interest on arrears urging insurers to give in?

5. June 2020, 10:55

As a policyholder, are you looking for a good investment in today’s world? What interest rate would you be happy about? Over 8% interest? An article by Stephan Michaelis, LL.M., specialist lawyer for insurance, commercial and corporate law at the law firm Michaelis Rechtsanwälte.

Stephan Michaelis, Michaelis law firm

Lawyer Stephan Michaelis is a specialist lawyer for insurance law. In any case, the legislature would like a defaulting debtor to pay relatively high default interest. This also applies to insurers. In principle, the defaulting debtor (insurer) must of course, from the time of default, compensate for all direct financial disadvantages that the obligee (policyholder) has suffered due to non-payment.

For example, a policyholder can take out a loan to have the insurance claim established. The insurer then has to pay the interest resulting from the required credit from the time of default.

So how does an insurer get in default? In some cases, the due date of the insurance benefit is already regulated in the insurance contract. In this respect, this must of course also be desired, i.e. asserted. It is best to give the insurer a reasonable deadline for this. Let’s say 14 days. If the insurer does not comply with the justified request for payment, it is in default from the date on which the insurer was given the payment deadline.

A policyholder does not have to take out a (“cheap”) loan. The policyholder can also refer to the law. In § 288 BGB it is very clearly regulated that in legal transactions in which a consumer is not involved, the interest rate for claims for payment is 9 percentage points above the base rate.

Warning: You do not get the 9%, but you still have to consider the base rate.

In 2020 the base rate is -0.88%. That means that the commercial policyholders get an impressive 8.12% interest on their claims. This very high interest rate brings one or the other insurer to their knees here and there. It used to be conceivable that long procedures were conducted for tactical reasons. Nowadays, even insurers are keen to get settled quickly if they know that they will likely have to provide the insurance benefit.

I currently see this constellation as applicable in the area of ​​business closure insurance. In my personal estimation, a majority of business closure insurers will have to provide the insurance benefits sooner or later. Therefore, the commercial policyholder should first set the insurer in default. Then he even has 3 years to assert the claims in court. For example, hotels, restaurants or the many other commercial policyholders (i.e. non-consumers) can first of all wait and see what trends there are in case law. There will certainly be further “BSV precedent judgments”. Should the process then take a few years, then commercial policyholders will have an impressive return of 8.12% interest on their legitimate claims over many years! Such a good investment is hard to come by these days!

Incidentally, it is of course also the case that from the time of default the insurer also owes the legal advice costs. A lawyer can therefore be called in to review the claims under this aspect. If it is a matter of legitimate claims from the business closure insurance, then not only the interest but also the legal costs are to be paid by the insurer due to default.

Good tip for all policyholders, right?

Photo: Florian Sonntag

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