Unclear clauses in a bourse policy
This article will discuss in which way an unclear clause in a bourse policy, concluded on the Dutch insurance bourse on the basis of co-insurance, should legally be determined. This is relevant because the insurer and the policyholder at the bourse usually do not discuss the policy wording, but rather use a wording that is often used at the bourse. This topic is recently discussed in an opinion of the Procurator-General of the Dutch Supreme Court in a case in which Ekelmans represented the insurers in the Supreme Court trial.
In the Netherlands, insurance is taken out either directly from an insurance company (on the basis of a company policy) or with the help of a broker through the Dutch insurance bourse (on the basis of a so called bourse policy). These different insurance products follow different rules whenever there is a dispute concerning the meaning of the policy wording at hand. Bourse policies are mainly taken out for grave and complex risks when coverage is not provided by just one insurer, but by multiple insurers. In the Netherlands this is often called co-insurance. An example might be the insurance of a big ship.
Usually, a professional bourse broker assists the future policyholder. Therefore, the policy between the insured and the insurer is mainly formed through negotiations between the insurer and the intermediary bourse broker. In co-insurance, the policyholder concludes an individual agreement with each participating insurer, always for the percentage the concerning insurer has accepted the risk for.
Thus, the professional bourse broker, acting as an intermediary on behalf of the aspiring-policyholder, offers the insurable risk(s) to the bourse insurer. A distinctive feature of a bourse policy is that the policy is concluded within a circuit of professional bourse brokers and insurers and that the policy wording is concluded through negotiations between these professional bourse brokers and insurers.
Explanation of an unclear clause
Within this framework, it is important to understand how an unclear wording should be interpreted in the event of a conflict.
In the case Chubb/Dagenstead (2008) The Dutch Supreme Court ruled that for the interpretation of a policy wording concluded on the insurance bourse, the focus should particularly be on the phrasing of the clauses and related comments, in light of the policy wording as a whole.
Recently, Ekelmans has assisted insurers at the Dutch Supreme Court in such a dispute with the insured. The case concerned a policy wording that was concluded on the insurance bourse on the basis of co-insurance. The Procurator-General of the Dutch Supreme Court argued that – besides the phrasing of a clause – judges should specifically take note of:
- the meaning of the used term(s) in common speech;
- the meaning of the used term(s) in a specific setting, for example the meaning of the term(s) within the insurance bourse circles;
- the purpose of the specific clause and the nature of the insurance;
- the ‘plausibility of the legal consequences to which various text interpretations could lead’ in case the phrasing of the clause offers (too) little grip for the case.
Knowledge of the bourse broker
Furthermore, the (assumed) knowledge of the bourse broker who represented the insured can also affect the interpretation of the wording . The legal allocation of the (assumed) knowledge of the bourse broker regarding the meaning of the product or the clause to the insured is not only based on the fact that a bourse broker (as a representative of the policyholder) concludes the insurance agreement on behalf of the policyholder, but also on the fact that the policy conditions are (mainly) the outcome of negotiations within bourse circles. This implies that the (assumed) knowledge of the bourse broker on the matter at hand can be hold against the policyholder whenever interpretation of an unclear wording needs to be established in a Dutch court of law.