When can an insurer refuse to pay?

Question

José Manuel Alburquerque · Accepted Answer

Only in the cases provided for by law or by the policy. The most common are that the damage is not covered, that the premium had not been paid, that something important the insurer asked about was concealed when the policy was taken out or that the insured event was caused deliberately. Not just any small print will do. Clauses that cut back the rights of the insured are only valid if they are highlighted and signed separately. And it is the insurer that has to prove the reason why it is not paying. What the law says Unpaid premium. If the first premium had not been paid through the policyholder's fault when the insured event occurred, the insurer does not pay, unless otherwise agreed. If what is missing is a later premium payment, cover is suspended one month after it falls due and resumes 24 hours after the day of payment, provided the contract has not already lapsed. Concealed or false information when taking out the policy. Only what the insurer asked in the questionnaire counts. Anything the policyholder was not asked about did not have to be disclosed. If there was wilful misconduct or gross negligence, the insurer does not pay. If there was not, it pays less, in proportion to the premium it would have charged had it known the truth. Changes that increase the risk and were not notified. If there was bad faith, the insurer does not pay. If not, it also pays proportionately less. Insured event caused by the insured in bad faith. In the case of fire, gross negligence is enough. In the case of theft, gross negligence also suffices, unless the policy says otherwise. False or concealed information about the insured event, where there is wilful misconduct or gross negligence. Late notification is not a ground for refusing to pay. In life insurance, suicide during the first year, unless the policy says otherwise. If it is the beneficiary who deliberately causes the death, the beneficiary loses his or her right, but the insurer is not released, because the sum insured becomes part of the policyholder's assets. Once a year has passed since the policy was signed, the insurer can no longer allege that something was concealed from it, unless there was wilful misconduct. What the policy says The policy can define which risks it covers, for what amount, for how long and where. Such clauses are valid without a special signature if they are clearly worded. But when a clause cuts back what the insured could expect from the cover he or she took out, the “Tribunal Supremo”, Spain's Supreme Court, regards it as a clause limiting the rights of the insured and requires it to be genuinely highlighted in the policy and accepted with a specific signature. If it is not, it cannot be applied to the insured. Clauses that render the insurance meaningless, such as a limit so low that it covers almost nothing, are not valid even if they have been signed. Who has to prove what It is for the insured to prove that there was an insured event and how much the damage is worth. It is for the insurer to prove the reason why it is not paying, such as bad faith or the fact that the damage falls within an exclusion. It must also prove that the clause it applies was accepted as the law requires. If its refusal does not stand up, it will normally also have to pay late-payment interest.