Which pre-existing conditions you must disclose, when the insurer loses its rights, and where the line between legal action and fraudulent misrepresentation lies.
Is your disability insurance company accusing you of concealing an illness when you took out the policy? A breach of the duty to disclose only leads to a loss of coverage if the insurer specifically asked about it, you are at fault, and they properly informed you of the consequences. Rogert & Ulbrich will review the claim and defend your insurance coverage.
What the pre-contractual duty of disclosure actually requires
The pre-contractual duty of disclosure obligates you to truthfully disclose certain circumstances when taking out insurance. This is regulated in Section 19 of the German Insurance Contract Act (VVG). A crucial limitation, which many policyholders are unaware of, is that you only have to disclose information that the insurer has explicitly requested in writing.
Since the reform of insurance contract law, there is no longer a general, spontaneous duty to disclose information. Previously, policyholders had to disclose all circumstances relevant to the risk on their own initiative. Today, the insurer bears the risk of unclear or missing questions. What they don't specifically ask about, they can hardly hold against you later.
This shift is the starting point of any defense. Before discussing pre-existing conditions, it's worth examining the motion: How exactly was the question formulated?
Is your insurer accusing you of providing false information? First, check whether the health questions were clear and presented in writing.
Which pre-existing conditions must actually be reported – and which do not.
Only information requested by the insurer must be disclosed, and even then, only within the scope of the specific question. This results in several practical limitations:
- Clear questionsAn unclear or ambiguous question is to the insurer's detriment. If several policyholders understand it differently, the insurer can usually draw no conclusions from a supposedly incorrect answer.
- Time periods queriedIf the insurer asks about treatments from the last five years, older cases do not need to be disclosed. Stick to the requested time period; you won't make a mistake.
- TrivialitiesA single cold or a minor incident without consequences is generally not relevant unless the insurer has explicitly asked about it.
- Knowledge of the intermediaryIf an insurance agent advises the customer to omit a piece of information when filling out an application, this knowledge can be attributed to the insurer. Case law considers the agent, in this respect, to be the insurer's eyes and ears.
In the event of a claim, insurers often portray any undisclosed diagnosis as a concealed fact. Attorney Dario Kovac is familiar with this strategy from his previous work on the insurance company's side. Whether this accusation holds water depends on the specific wording of the question, not on the mere existence of a previous diagnosis.
Are you unsure whether a pre-existing condition was subject to disclosure? Have your application and the wording of the questions reviewed before you contact the insurer.
The legal consequences: withdrawal, termination or contract adjustment
The insurer's rights depend crucially on your degree of fault. The law stipulates the consequences in stages:
- Intentional or grossly negligent conductThe insurer may withdraw from the contract (§ 19 para. 2 VVG). However, in cases of gross negligence, the right of withdrawal is forfeited if the insurer would have concluded the contract under different conditions even if aware of the negligence.
- Simple negligence: Here, the insurer may only terminate the contract (§ 19 para. 3 VVG) and not withdraw retroactively.
- No faultIf you could not have known about the circumstances, you are spared the need for withdrawal and termination. At most, a contract adjustment for the future is possible.
Furthermore, there is the issue of causality. According to Section 21 Paragraph 2 of the German Insurance Contract Act (VVG), the insurer remains obligated to provide benefits if the undisclosed circumstance was neither the cause of the occupational disability nor of its extent. Therefore, a concealed knee injury does not justify a refusal to provide benefits if you are occupationally disabled due to a mental illness. However, this causality threshold does not apply in cases of fraudulent concealment.
Is the insurer claiming a cancellation of the contract? Check whether the undisclosed illness is actually related to your occupational disability.
When the insurer loses its rights
Even if there is a breach of the duty to disclose information, the insurer can lose its rights. Three points are particularly important in practice:
- Duty to informThe insurer must have informed you of the consequences of a breach of the duty of disclosure by means of a separate written notification when you submitted your application (§ 19 para. 5 VVG). If this notification is missing or hidden, the insurer generally cannot invoke the right to rescind or terminate the contract.
- deadlinesThe insurer must exercise its rights within one month of becoming aware of the breach of the duty of disclosure (§ 21 para. 1 VVG). Furthermore, these rights are excluded after five years, or after ten years in the case of intentional or fraudulent breach (§ 21 para. 3 VVG).
- Lack of causalityThe insurer remains liable for benefits despite the injury if the circumstance was irrelevant to your occupational disability.
These are precisely the points that are often overlooked in rejection letters. It's worthwhile to examine the letter line by line against the legal requirements, instead of simply accepting the accusation.
Has a notification pursuant to Section 19 Paragraph 5 of the German Insurance Contract Act (VVG) been provided and have the deadlines been met? This question often determines the entire insurance coverage.
Simple breach of the duty to report or fraudulent intent? The crucial distinction.
The most severe option is the avoidance of the contract due to fraudulent misrepresentation pursuant to Section 22 of the German Insurance Contract Act (VVG) in conjunction with Section 123 of the German Civil Code (BGB). This differs fundamentally from a simple breach of the duty to disclose information.
Fraudulent intent requires a subjective element: you must have knowingly provided false information and at least tacitly accepted the possibility of influencing the insurer's decision. Simply forgetting a treatment or a misunderstanding is insufficient. Case law requires concrete proof of this intent to deceive and does not accept general assertions.
The consequences of fraudulent misrepresentation are severe: The contract is considered void from the outset, the threshold of causation does not apply, and it can be challenged for up to ten years. Insurers therefore frequently resort to this accusation, even when the necessary conditions are not met. Crucially, however, the burden of proof for fraudulent misrepresentation rests entirely with the insurer.
Is your insurer accusing you of fraud? They must prove this serious accusation – have their claims refuted by a lawyer.
What you should do if the insurer makes the accusation
If your insurer accuses you of violating your duty to disclose information, a structured approach is crucial. These are the important steps now:
- Secure application and questionsObtain a copy of your insurance application and check how the health questions were specifically worded.
- Check notice and deadlines: Clarify whether the insurer has issued the notification pursuant to Section 19 Paragraph 5 of the German Insurance Contract Act (VVG) and has complied with the one-month deadline.
- Clarify causalityDetermine whether the illness in question is actually related to your inability to work.
- Do not accept the accusation of fraud.If the insurer alleges fraudulent intent, demand a specific explanation. General accusations are not sufficient.
- Don't explain anything without thinking it through.Do not submit any written statements until the legal situation has been clarified. Careless wording will provide the insurer with ammunition.
Do not sign or confirm anything until you know the consequences of your statement.
This article is part of our overview of the five most common reasons for rejection in disability insurance. We will discuss in more detail how insurers handle referrals and benefit claims in separate articles. You can find an overview of our work on our insurance law page.
The sooner the allegation is investigated, the better. Have your case assessed while the deadlines for responding are still open.
Rogert & Ulbrich – Your lawyers in insurance law
Rogert & Ulbrich defend policyholders nationwide against allegations of breach of disclosure obligations. Attorney Dario Kovac, who is familiar with insurers' review and rejection strategies from his previous work on the insurers' side, serves as the contact person for insurance law. We combine this insider knowledge with the firm's consumer protection experience from major cases in banking, capital markets, and automotive law. This allows us to engage with insurers on equal footing.
We obtain the application and insurance terms and conditions, review the wording of the questions, the disclosure requirements, and the deadlines, and assess whether the insurer's claim is valid. We enforce your insurance coverage against the insurer out of court. If they maintain their position, we will represent you in court. We involve any existing legal expenses insurance early on and obtain the coverage confirmation for you.
Has your disability insurance company contested your contract due to an alleged breach of your duty to disclose information or refused to pay out? Get in touch and secure your rights.
