The Supreme Court (“Corte di Cassazione”), by decision No. 2872 of 13 February 2015, confirmed the recent and prevailing case-law, according to which “claims made” clause in insurance contracts covering the risk for third party liability is valid and effective.
Before going deeper into the merits of what affirmed within the said decision, it is necessary, for the sack of completeness, to highlight that the clause in point has to be compared with the “loss occurrence” clause. On the other hand, “claims made” policies provide coverage for those claims that are first "made" by a third party against the insured during the policy period, whereas “loss occurrence” policies provide coverage for an act or omission of the insured during the policy period, from which insured’s liability to pay compensation arises.
The Supreme Court affirmed the followings:
“to this regard it must be reaffirmed the principle that claims made clause in an insurance policy covering the third party liability (by virtue of which the insurer is obliged to indemnify the insured of the prejudice consequence of unlawful act committed by the insured before the policy inception, if the third party made a claim during the insurance period) is valid and effective, case by case, under an assessment on the merits whether such clause is a restrictive clause under Art. 1341 of the Civil Code”.
Moreover, this opinion is shared by the legal literature, according to which, where in the insurance of goods, the scope of the contract – i.e. the risk – is represented by the material goods and the insurer’s obligation consists accordingly in indemnifying the insured of the good loss or damage, in TPL insurance, the scope of the contract is to protect the insured personal assets.
In the recent decision of the Supreme Court, the judges went into the merits of the matter and correctly made it clear (sharing the above mentioned principle) that “claims made” clause cannot, however, be considered as a restrictive clause in abstract, since it does not lay down limitations of liability in favour of the insurer, but defines the scope of the coverage, establishing which claims can be indemnified. By this reasoning, the Supreme Court adhered to the constant legal cases on this matter, which as seen, consider valid the “claims made” clause.
With regard to the profile of voidness that the Supreme Court did not cover, the decision by the Court of Appeal of Rome, No. 312 of 18 January 2012 has to be recalled. It affirms that “if, in particular, the clause was void, that would overwhelm the insurance contract as a whole, with the further consequence that the insured could, at the most, claim the premium back as undue, but he would not be indemnified. Should the “claims made” clause be found void, the insurance agreement could not survive pursuant to Art. 1419 of the Civil Code, since it could not be affirmed that the insurer would have underwrite the risk in any case against the same premium, in the absence of a “claims made” clause and the policy was a “loss occurrence” one. The reason is that the premium in proportion to the “claims made” clause, which circumscribes the insurer’s obligation within a specific period of time, would not be proportionated any more in case of a “loss occurrence” clause, which determines an obligation for a wider and uncontrollable period of time, potentially extended to the time-bar for the third party claim”.
What above is restated by the legal literature, which underlines that in the two kind of insurance (“loss occurrence” and “claims made”), the area of risk (linked to the premium) is different. Therefore, the voidness (or inefficacy) of the “claims made” clause that brings the agreement to the “loss occurrence” scheme, would determine an alteration of the reciprocity of the contract obligations1 , being clear that the parties (in particular, the insurer) would not have concluded the agreement in the absence of the “claims made” clause.