Policy terms of an insurance contract are not always clear. Usually, the content of the policy terms is not negotiated between the insurer and the policyholder. When damage occurs, it regularly happens that the insurer, referring to the policy terms, rejects the payment of insurance monies. This is not always justified. The interpretation of policy conditions is therefore regularly the subject of litigation. For example, the Noord-Holland court recently ruled that damage caused by a drunk driver still had to be compensated.

What was at stake here?

On 27 November 2019, a driver caused a traffic accident on the A1 motorway. This driver collided with his car against a Jaguar. The Jaguar was pushed on to a Ford stationary in front of the Jaguar as a result of the collision, damaging both the cars. The driver was issued an official report by the police for, in brief, driving under the influence of alcohol (Section 8 Road Traffic Act 1994).

A total amount of €16,367.03 was paid to the injured parties by the insurer. The insurer recovered this amount from the driver.

Article 31 of the policy conditions on "Causes not always insured" included the following:

“ Damage caused by a driver who is not authorised to drive is not insured

– or by the absence of a valid driving licence.

– or by an expired driving licence (Well insured if the driving licence has expired less than 1 year.)

– or by a court order.

Well insured if an insured proves he did not know or could not do anything about it.

Well insured when driving lessons according to the laws and rules."

Insurer's position

The insurer based its claim on the fact that the damage suffered by the injured parties was caused by the fault and wrongful act of the driver who was unable to stop his car in time, in violation of Article 19 of the RVV (Reglement verkeersregels en verkeerstekens).

Under Article 31 of the policy conditions, the insurer would be entitled to recover the amount it paid out from the driver because he was under the influence of alcoholic beverages at the time of the collision.

Driver's position

The driver argued that the insurer had not sufficiently substantiated that one of the causes mentioned in article 31 of the policy conditions was involved. In no way was alcohol consumption mentioned in the policy conditions as a ground for exclusion, so that this was not or did not have to be clear to him.

Judgement of the court

It was not in dispute that the driver had been involved in the traffic accident and that he was liable for the damages suffered by the injured parties as a result of the collision. These damages were compensated to the injured parties by the insurer because the basic principle of the statutory scheme is that a victim's damages are compensated. The issue in this case was therefore whether the policy conditions required the driver to compensate the insurer for the damages paid by the insurer to the injured parties.

The court found in favour of the driver. To this end, it considered the following:

"Article 31 of the policy conditions has the heading that damage caused by a driver who is not allowed to drive is not insured. Due to the layout of the article in the policy conditions submitted, it seems as if the article then lists which cases this refers to, namely (i) due to the lack of a valid driving licence, (ii) due to an expired driving licence or (iii) due to a court order. The text does not mention that these are just examples of cases where a person is not allowed to drive. There is also no explicit reference there to alcohol consumption. To that extent, the text of section 31 of the policy conditions is unclear as to whether it also covers offences under section 8 of the 1994 Road Traffic Act. Admittedly, the insurer did argue at the hearing that there is no question of an exhaustive enumeration in Article 31 of the policy conditions, but, as stated above, this is not evident from the text and layout of that article. Further, the insurer has not submitted anything that removes any doubt about the interpretation of Article 31 of the policy conditions.

 It is up to the insurer, as the drafter of the policy conditions, to be clear about which damage is not insured. That ambiguity about this has arisen is for the account and risk of the drafter of the policy conditions. Furthermore, she did not claim anything, nor did it become apparent that there was any reference elsewhere in the policy conditions to alcohol consumption and whether or not the cover was excluded."

Conclusion

In the judge's opinion, the insurer had not sufficiently substantiated that it could rely on a ground for exclusion in the policy terms and conditions. The insurer's claim was therefore dismissed.

The so-called "contra proferentem rule" (section 6:238(2) BW) also applies in this case. This is a rule in contract law meaning, in short, that an unclear provision in a contract must be interpreted to the disadvantage of the person who demanded this condition at the conclusion of the contract.

Do you need help with the interpretation of a contractual provision or would you like advice on an agreement? Then contact one of our lawyers without obligation. We will be happy to assist you!