Supreme Court makes latest decision on ‘claims made’ clauses
By decision no. 3123 of 2 February 2024, the Supreme Court ruled once again on “claims made” clauses.
The validity of claims made clauses has been the topic of an intense and longstanding case law and scholars’ debate in Italy. According to case law of 2005, these clauses should have been considered unfair and therefore void unless approved pursuant to Article 1341 of the Italian Civil Code.
Since 2016, there has been a revirement. The Court of Cassation, first with judgment no. 9140/2016 and then with judgment no. 22437/2018, recognized the legitimacy of claims made clauses upon certain conditions, stating that it is a covenant delimiting the object of the contract and not the liability of the insurer.
However, even after the revirement, there have been many conflicting precedents of Italian courts about claims made clauses.
The case at issue
The Supreme Court’s decision of 2 February 2024 regards a medical malpractice case. The heirs of a patient filed a lawsuit for compensation of non-pecuniary damages due to the alleged negligent conduct of the defendants, including a local hospital, which in turn added to the action its insurer.
The insurer denied coverage since the claim fell outside the policy period. In fact, the applicable policy provided coverage for claims made during the policy period 31 December 2001 - 31 December 2002 and in any case within a year from its expiry date, for wrongful actions committed during the same period.
The patient died during the insurance period, but the first claim was made against the hospital on 19 April 2004.
The first instance Court established the liability of the hospital and ordered to pay non-pecuniary damages to the heirs. The Court also upheld the indemnity claim brought by the hospital, declaring the claims made clause provided by the aforementioned policy null and void.
The Court of Appeal granted the appeal of the insurance company and declared the claims made clause lawful.
The second instance decision was appealed by the hospital before the Court of Cassation.
The judgment of the Supreme Court
The hospital sustained that the claims made clause was null and void since it was unfair and provided a forfeiture to the exercise of a right by the insured party.
By the judgment under examination, the Supreme Court has adhered to the recent case law1 according to which, the claims made clause does not breach Article 2965 of the Civil Code. According to the Court the claim of the injured party can be configured as a future, unforeseen and unforeseeable event that inevitably contributes to the identification of the insured risk, therefore claims made coverage “is compliant with the model of insurance of civil liability referred to in paragraph 1 of Article 1917 of the Civil Code”.
So, the claims made clause cannot be void merely because it makes the forfeiture of the right depend on the choice of a third party. The third party’s claim – as a future and uncertain event – mirrors the typical structure of the insurance contract, in which the effectiveness of coverage must depend on a fact and not on the insured.
In light of the above, the Supreme Court dismissed the appeal brought by the hospital.
1See judgment no. 12908/2022.
