Heavy rain and flood damage: Compensation if there is no natural hazard insurance
Up to 99 percent of all buildings, even in flood areas, were insurable. But only about 45 percent of the buildings are actually insured against natural hazards such as heavy rain, flooding or earthquakes. The insurance broker has extensive advisory obligations.
If no natural hazard insurance was brokered, but perhaps other usual insurance cover for a building (e.g. liability, storm, fire, hail, legal protection, tap water insurance), every judge will ask himself whether the insurance customer before deciding against a natural hazard insurance was correctly advised by the intermediary. Questionnaires based on the motto “Which little pig would you like?”, Even those on the Internet, cannot replace qualified full advice (BGH, judgment of March 10, 2016, Az. I ZR 147/14). A variant of the questionnaire with the following agent liability would be underinsurance.
In and of itself, the frugality of the customer is not a reason for a natural hazard insurance to be ruled out. Rather, the broker has to look for alternatives – for example by offering a correspondingly higher deductible to reduce premiums for all building insurance components – even with car insurance, among other things, savings could alternatively be made instead.
Anyone who has not taken out a possible natural hazard insurance must even expect that state aid will be cut by half as a result – this is also a claim to be made.
The operations of numerous insurance brokers are so small that they do not have a direct connection for working with all insurers. Then they switch to the proverbial wholesale insurance markets, in particular so-called pools and purchasing cooperatives. However, these then only have a limited range of insurers and tariffs on offer. Some brokers also shy away from offering cheaper insurers from abroad, for example.
The broker must point out this then restricted basis for advice from the start – in accordance with Section 60 (2) of the Insurance Contract Act (VVG) specifying its limited market base. Perhaps there would have been a more suitable and / or cheaper insurance cover elsewhere, for the lack of which the broker is now liable. The poorly insured customer would often have sought advice elsewhere after prior clarification?
If no natural hazard insurance could have been arranged at all, the wrong advice itself would not lead to damage due to the lack of insurance benefits, because the customer would not have been able to insure the risk anywhere, even with correct advice. However, the broker customer could also derive his damage from the fact that – if the broker had pointed out this gap, which was uninsurable due to the high risk – he would not have invested anything in his property or would have sold it in order to acquire a new one on secure property.
It is not sufficient to point out loopholes in the existing contract when advice is given. The advice to insure all risks is still enough. Rather, the insurance broker has to check the property to be insured himself – the Internet and questionnaires cannot replace an inspection.
In general, the broker may not accept any inappropriate instructions from the customer if the customer has perhaps not understood him correctly or, due to insufficient advice, does not yet have a sufficient basis for decision-making. The average insurance customer also needs a qualified basis for decision-making in order to (further) dispense with (possibly partial) advice – otherwise the broker accepts inappropriate behavior; and therefore also liable for the reason.
One-off advice is not enough, because the insurance broker has to keep an eye on the insurance object and, in the event of changes, work towards risk-appropriate adjustments (BGH, judgment of April 5, 1967 – Ib ZR 56/65, VersR 1967, 686). Advice should also be given about insurability that will be added at a later date. It goes without saying that a transfer of coverage from an earlier compulsory insurance against natural hazards to a building insurance without such coverage will result in liability.
Customers repeatedly find that their “supervisor” has never thoroughly studied the fine print, i.e. the insurance conditions, when it comes to insurance issues. Legal subtleties arise when the insurer thinks, for example, after a flood that only heavy rain is insured – and announces that it will not provide any benefits without prior legal action.
How should an insurance customer as a layperson legally grasp the difference between perhaps heavy rain, flood and flood or backwater without advice?
Anyone who thinks that they feel damaged by the operator due to a lack of early storm warnings by the state, or failure to drain water in retention basins or dams, will find out that state liability usually requires that no one else is liable.
A former justice minister had a specialist institute ascertain that at the time around 85 percent of insurance brokers (brokers and agents) had not given the customer any advice before making his decision. The meaning and purpose of this obligation according to the so-called EU Brokerage Directive (valid since May 21, 2007) is to enable the customer to carefully examine all reasons and recommendations before making a decision before taking out insurance. It is therefore of no use if such documents are forwarded retrospectively – it is rather the content of the documentation and the timely delivery that decides.
Brokers have an appropriate liability insurance for such advisory errors. The insurer they represent is regularly jointly liable for agents and, according to VVG, has its own obligation to provide advice in accordance with Section 6 VVG even if there is a need for advice – for example due to the lack of natural hazard insurance.
The documentation is later the best proof of the advice gap, i.e. incorrect advice and broker liability, if, for example, it is often empty and empty. If the documentation is completely missing, or if the agent cannot prove the timely delivery to the insurance customer, this leads to a reversal of the burden of proof (BGH, judgment of November 13, 2014, Az. III ZR 544/13).
The omitted documentation is then not yet proof – it only leads to the fact that the policyholder first only has to specifically assert the specific incorrect advice, and then the broker / agent bears the burden of proof that he has given correct advice. Why is it not enough that he offered insurance against natural hazards, nor that he urgently recommended it? Rather, he must have drastically demonstrated the consequences of their absence and really carefully examined and explained all possibilities to somehow make them possible.