Corona and company closure: Interest on arrears puts insurers under pressure

There is hardly any other topic that concerns the industry as much as business closure insurance and the refusal of many insurers to pay in full for business closures due to the corona pandemic. It depends on the specific contractual terms of the policy whether an insurer is liable to pay benefits - generalized statements are not possible here. And yet legal experts assume that many insurers are liable to pay. If the service is refused, they recommend taking legal action. Another tip is now given by Stephan Michaelis, specialist lawyer for insurance, commercial and corporate law in the law firm Michaelis Rechtsanwälte, in a guest comment.

Are you currently looking for a good investment as a policyholder? What interest rate would you be happy about? Interest over eight percent?
In any case, the legislature would like a defaulting debtor to bear relatively high default interest. This also applies to insurers.

In principle, the debtor (insurer) who is in arrears must of course compensate for all immediate financial disadvantages that have arisen for the creditor (policyholder) due to the non-payment from the time of the arrears.

Stephan Michaelis is a specialist lawyer for insurance law. Before that, he worked in insurance sales for a long time.
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For example, a policyholder can take out a loan to have the damage done. The interest resulting from the required credit must then be paid by the insurer from the time of the default.

Insurance benefits must be claimed
How does an insurer default? The due date of the insurance benefit is already regulated in the insurance contract. In this respect, of course, this must also be sought, i.e. asserted. It is best to set an appropriate deadline for the insurer. Let's say 14 days. If the insurer does not comply with the justified request for payment, he is in default from the date on which the insurer was given the payment period.

However, a policyholder does not have to take out a ("cheap") loan. The policyholder can also rely on the law. In § 288 BGB it is very clearly stipulated that in legal transactions in which consumption is not involved, the interest rate for payment claims is 9 percentage points above the base interest rate.

Warning: you do not get the 9 percent, but you still have to take the base interest rate into account.

In 2020, the base rate is -0.88%. This means that commercial policyholders receive an impressive 8.12 percent interest on their claims. This very high interest rate forces some insurers to their knees here and there. In the past, it was conceivable that long procedures were carried out for tactical reasons. Nowadays even insurers are interested in quick regulation if they know that they are likely to have to provide the insurance benefit.
Personal assessment: The majority of insurers have to provide the benefit sooner or later
I currently see this constellation as applicable in the area of ​​business closure insurance. In my personal assessment, a large number of business closure insurers will have to provide the insurance benefit sooner or later. Therefore, the commercial policyholder should first put the insurer in default. Then he even has three years to make legal claims. For example, hotels, restaurants or the many other commercial policyholders (i.e. non-consumers) can first wait and see what trends there are in the case law. There will certainly be further "BSV precedent judgments". If the procedure should also take a few more years, commercial policyholders will have an impressive return of 8.12% interest on their justified claims for many years! It is hard to get such a good investment these days!

Incidentally, it is of course also the case that the insurer also owes the legal advice costs from the time of default. Therefore, a lawyer can also be involved in this aspect to review the claims. If there are justified claims for benefits from the business closure insurance, then not only the interest, but also the legal costs are to be paid by the insurer due to the delay.

A good tip for all policyholders, right?