Brussels, 23/04/2015 (Agence Europe) - The precise way in which insurance arrangements in a contract of insurance work must not only be grammatically intelligible but also set out in a transparent way so that the consumer can evaluate the economic consequences which derive from it. This is particularly important if the insurance contract forms part of a contractual framework.
Such is the substance of the ruling delivered by the Court of Justice of the EU. In this case (C-96/14), a European citizen, Jean-Claude Van Hove, concluded two mortgage loans and signed a group insurance contract which guaranteed 75% cover of the loan repayments in the event of total incapacity for work. Following an accident at work, Van Hove was found to have a permanent partial incapacity rate of 72% within the meaning of French social security law. The doctor appointed by the insurance company concluded that Van Hove's state of health allowed him to carry on appropriate employment on a part-time basis. The company therefore refused to continue to cover the loan repayments in respect of Van Hove's incapacity.
A French court asked the Court of Justice whether the total incapacity for work clause and the payment by the insurer of loan repayments may be assessed as unfair, under the terms of the directive on unfair clauses (93/13/EEC), as Van Hove contends. Since this clause pertains to the very nature of the contract, the European judges note that it would seem that it cannot be subject to an assessment of unfair character in terms of the directive. It is, however, for the French court to determine if this is so.
As to whether the clause at issue is clear and understandable, as the directive demands, the Court concludes that it is not enough that a clause - even when it relates to the main subject matter of an insurance contract - is formally and grammatically understandable. It must also set out transparently the specific functioning of the insurance arrangements.
In addition, it must take into account the contractual framework of which the clause forms part, so that that consumer is in a position to evaluate the economic consequences for him which derive from it. This is easier to achieve when the insurance contract is concluded separately from the loan contracts the Court says. Such was not the case in the matter at issue: according to the Court, the French court may assess any possible unfair character of the contested clause. (Jan Kordys)