Frankfurt Higher Regional Court: Insurance brokers may be obliged to draw attention to coverage exclusions – Laws and insurance products

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An insurance broker may exceptionally be obliged to draw the attention of an insured to certain exclusions of cover. This was confirmed by the Higher Regional Court
[Oberlandesgericht – OLG] Frankfurt (decision of 13 May 2022, 7 U 168/16).

OLG Frankfurt am Main ordered an insurance broker to pay damages due to insufficient clarification of coverage exclusions in an accident insurance policy. The broker had omitted to indicate to the subsequent policyholder during the consultation that the general accident conditions excluded insurance cover for accidents during races.

The court found that insurance brokers are generally not required to provide clarification of coverage exclusions. Rather, it is the responsibility of the policyholder to obtain a copy of the terms and conditions of the contract and to check them. Exclusions are always to be expected. However, an exception to this rule must be made if the insurance broker has to reckon with the obvious possibility of a misunderstanding on the part of the insured as to the scope of the insurance.

This was the case here: the insured had informed the broker several times during the consultation that he regularly participated in motorcycle races. The OLG considered the lack of clarification a violation of the consultation and documentation obligations of s. 61 German Insurance Contract Law
[Versicherungsvertragsgesetz, VVG]. The broker should have realized that the negotiated insurance would not be able to cover the main accident risk.

Insurance brokers should always take OLG Frankfurt am Main’s decision to heart when providing brokerage services. The wishes and special circumstances of the insured should be carefully noted. Recognizable personal or situational circumstances of the policyholder may lead to a more extensive obligation to advise, even in the case of less complex insurance products. In addition, comprehensive advice documentation avoids liability pitfalls.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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Elna M. Lemons