Insurance Contract and Damage Quantification Procedure

Seguro de incendio

 

How is the article applied 38 of the Insurance Contract Law to quantify the damage suffered in a fire?

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When a fire breaks out, one of the issues that generates the most disputes in the courts is the quantification of the damage. Article 38 LCS regulates an extrajudicial procedure that has the purpose of facilitating a settlement of the claim as quickly as possible when the parties disagree in the economic quantification of the damages derived from it..

This procedure is imperative and has short deadlines. Furthermore, its application raises doubts. In this post we review one of these cases resolved by the Section 1 of the Provincial Court of León in ruling on 28 July 2020, with No Resolution 490/2020. It upheld the appeal filed by Ms.. Ofelia against the sentence handed down in the first instance by no. 2 Ponferrada. He sentenced REALE SEGURO GENERAL, S.A. (onwards, REAL), to pay to Ms. Ophelia, 17.939,41 € as compensation for the production of the claim, increased with the interests provided for in art. 20 LCS, that accrued from the date the expert report became final.

Fact background,,es,Juan Alberto and Paulina filed suit against FTA,,es,Asset Securitization Fund,,es,requesting the declaration of nullity for abusive of the floor and ceiling clauses contained in the novation contract of the mortgage loan of,,es,with the corresponding refund of amounts unduly collected,,es,The Securitization Fund Management Company,,es,Beech,,es,acting on behalf of FTA, he responded to said claim alleging that he lacked passive legitimacy since the entity had no legal personality and that it constituted only a private and open fund and that therefore the passive legitimization corresponded to BBVA as successor of Catalunya Banc that was the Company fund constituent,,es

In the place that Dña had insured. Ophelia, there was a fire. As REALE did not want to pay the insured amount after the loss occurred, Ms.. Ofelia filed a lawsuit, exercising the action of claim of amount, for the multi-risk insurance that I had contracted with REALE. He presented as an assessment of the damage an expert report prepared in accordance with the provisions of art. 38 LCS.

Primera Instancia

The Court of First Instance No. 2 Ponferrada sentenced the 31 January 2020, dismissing the lawsuit filed by Dña. Ofelia contra REAL.

The Court considered that the provisions of art. 38 LCS, well it existed discrepancy between the insurer and the insured, not only in the amount of compensation, but also in the policy coverage. Also, The Court concluded that the communication made by Ms.. Ophelia with REALE was in bad faith.

Provincial Court

Ms.. Ofelia filed an appeal.

Article procedure 38 LCS

To resolve the content and interpretation of art. 38 LCS, the Court brought up the jurisprudence that established the nature and scope of the extrajudicial procedure established in said precept.

On the one hand, the STS 14 September 2016, with No Resolution 536/2016, citing the STS de 25 June 2007, concluded that “(…) the purpose that the law attributes to the procedure established in the precept, (…) is to facilitate a settlement of the claim as quickly as possible when the parties (…) Disagree in the economic quantification of the damages derived from it, articulating, depending on that purpose, an imperative procedure for litigants, Although this imperative trait disappears when the discrepancy does not focus solely on the quantification, as happens in cases where the insurer disagrees with the substance of the claim, for questioning the very existence of the sinister, your coverage by the insurance policy, or other circumstances that could influence its causation or the result ".

(…) “el procedimiento previsto en el art. 38 LCS It is an extrajudicial procedure for the settlement of the damage aimed at reaching an agreement on the amount and form of the compensation and not to resolve questions about the causes of the loss and the interpretation of the contract (…)” (STS 197/2010, of 5 April).

Challenge expert report

Also, It also established that the expert report could be challenged, being legal business, for the general causes of nullity established in the Arts. 1265 and following of the CCivil. This opinion would be binding if acquired firmness for not having been challenged within the legally established deadlines in such precept.

Even if, after the analysis of doctrine and jurisprudence, the Chamber concluded that art. 38 LCS it followed that, when it was not challenged within the legally established period, the concurrence of discrepancies in the scope of coverage of the policy could be raised in the judicial phase and that, It could be discussed beyond the amount of compensation.

He considered the Chamber, as the insurance company did not contest the expert report within the legally established deadlines by art. 38 LCS, could not in judicial phase argue the incorrect use of the procedure, not only did the deadline for the appointment of a second expert, but it also did not contest the expert report that was prepared by Ms.. Ophelia.

Disagreement about the scope and coverage of the policy

After assessing whether the disagreement about the coverage of the policy was already raised in initial conversations between the parties, The Chamber concluded that the issues unrelated to the amount of compensation were not clearly specified, nor in the existence of the claim or the interpretation of the policy. Therefore, the provisions of art. 38 LCS. Nor would the fact that the underinsurance situation was brought up would justify the invalidity of the procedure of said provision, because it was a matter strictly of compensation sum. Any discrepancy should have been alleged in the challenge phase of the expert report.

Bad faith on the part of the insured when communicating with the company through the mediator

When the accident occurred, and Dña. Ofelia received the compensation amount that REALE considered correct, Ms.. Ofelia appointed an expert and communicated it to the insurance mediator.

In the first instance, It was considered that Mrs.. Ofelia had not carried out correctly the procedure of art. 38 LCS by communication through the insurance mediator.

However, the Chamber brought up the art. 12.1 of the Insurance Mediation Law, that stated that "The communications that the policyholder makes to the insurance agent who mediates or who has mediated in the contract will have the same effects as if they had been made directly to the insurance company."

Therefore, there was no bad faith on the part of Mrs.. Ophelia.

Conclusion

Article 38 LCS regulates an extrajudicial procedure that has the purpose of facilitating a settlement of the claim as quickly as possible when the parties disagree in the economic quantification of the damages derived from it., aimed at reaching an agreement on the amount and form of compensation and not resolving questions about the causes of the loss and the interpretation of the contract. If there are no doubts about the causes of the loss and the coverage of the policy, el procedimiento del artículo 38 LCS es imperativo.

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