On 25 February 2018, the Colombian Supreme Court of Justice handed down a judgment in which it ruled on a dispute related to the coverage of defense costs contained in a Public Servants Civil Liability policy.
The dispute revolved around a condition in the policy that required public officials to request prior authorisation from the insurer to incur defense costs. The condition also stiputlated that the insurer's failure to respond within 15 days would be deemed as a automatic, tacit approval.
In the case analyzed by the Court, the insured incurred defense costs without prior authorisation from the insurer, but upon claiming from the insurer, no response was given within the agreed 15 days. Subsequently, the insurer rejected the payment of the claim, due to the lack of prior authorisation, among other things.
In reaching its verdict, the Court indicated that the costs incurred by the insured without prior authorisation of the insurer, corresponded to an urgent need to defend itself and, therefore, coverage could not be denied for that reason. It was also specified that the timeframe for the insurer to pronounce itself was 15 days. Consequently, although under normal conditions silence by the insurer could not be interpreted as an acceptance or denial of the claim, in this case there was a "type of positive silence", which had two main legal effects:
(i) an automatic tacit acceptance to cover defense costs.
(ii) an interruption of the limitation period from day 15