Update regarding shutdown insurances

The coverage of shutdown insurances during the corona crisis is highly controversial. Now insurers are showing a willingness to compromise.

The ongoing measures to contain the corona pandemic are having a severe impact on the economy. In this context, shutdown insurances are becoming the focus of attention. Shutdown insurances were taken out for the event that a company is unable to operate due to a measure under the German Protection against Infection Act. Insurers would then pay certain daily rates for the duration of the shutdown.

No standardised coverage

As already explained in an earlier blog post (see article “Insurance versus corona - when does a shutdown insurance pay”), the coverage of an insurance must be checked individually for each insurance contract since insurance conditions vary considerably. Whether coverage during the corona crisis exists in the individual case depends, in part, on matters of interpretation. Complicating matters further is the fact that, to date, there is no case law on this particular issue. Case law has merely established the general principle that insurance conditions must be assessed from the point of view of an average policyholder. Consequently, it depends on the understanding and the interests of a policyholder without special knowledge.

Insurers’ willingness to compromise

Against this background, insurers are now beginning to show a willingness to compromise. With the participation of the Bavarian Ministry of Economic Affairs, representatives of the business community and the insurance industry have recently developed a recommendation according to which insurance companies should pay between 10 and 15 percent of the otherwise customary daily rates for the duration of the shutdown. Several insurance companies have already stated that they intend to follow this recommendation.

The press release of the Bavarian State Ministry on this agreement can be found here: Link.

Legal qualification

Legally, this is a settlement, since both parties are making concessions to eliminate uncertainties about the contractual relationship. It is likely that, in the cases in question, the insurance companies will be providing extra-mandatory benefits which they are not obliged to provide pursuant to the wording of the insurance contracts. On the other hand, policyholders will have to waive their right to seek judicial clarification as to whether full insurance coverage does exist after all. In return, they will receive financial support more quickly. In the case of shutdown insurances during the corona crisis, an early compromise could prevent the occurrence of a large number of conflicts.

Conflicts cannot always be avoided – we provide advice on all questions of judicial and extrajudicial conflict resolution.

Dr. Philipp Sahm

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