As members of the Insurance Department of Belzuz Abogados and lawyers specialists in insurance, we have been reviewing the various defences that the insurer against adopt to contest a direct action brought by an injured third party or his heirs.

On this occasion, we shall analyse the defence based on the “limit of the sum insured” as an argument against claims exceeding that limit that are brought by injured third parties. The sum insured in the policy constitutes the quantitative limit that the insurer accepts in order to respond to the risk insured in the event of a claim.

Article 76. "The injured party or his heirs may file a direct action against the insurer to demand compliance with the obligation to compensate, without prejudice to the insurer’s right to bring an action for recovery against the insured, if the damages suffered by the third party are due to fraudulent conduct on the part of the insured. The defences that the insurer can assert against the insured are inadmissible in the case of a direct action. The insurer may, however, file a defence asserting the exclusive culpability of the injured party and the personal defences it may have against the latter. For the purpose of exercising a direct action, the insured will be obliged to disclose to the injured third party or his heirs the existence of the insurance contract and its contents".

This question is closely related with the concept of loss, especially in cases where a number of persons are affected, which may mean that the compensation paid by the insurer exhausts the “limit of the sum insured”, so once this limit is reached an “excepción”, or defence against the injured parties’ claims, can be filed.

Since the notion of loss is not covered in the LCS, although it contains references to it, it will be necessary to look at the policy itself to see how this concept is formulated.

Policies delimit the risk insured, but of special interest are those losses in which the damages caused to others, which render the party at fault liable, can be attributed to the same technical grounds as those covered by the policy, so may give rise to one or more claims.

In these cases, when there a number of injured parties, a so-called “unit of loss or serial losses” clause applies, which is intended to set a cap on the insurer's maximum liability.

“The harmful event or series of events due to the same original cause is considered to be a single and unique incident irrespective of the number of claimants or claims made”.

Doctrine and case law have defined the unit of loss as the set of claims that derive from the same loss event, action or omission of a professional nature, irrespective of the number of claimants, and they are considered to constitute a SINGLE AND UNIQUE LOSS (SAP Madrid of September 30, 2014 (...)”. The fact that the cases may be separated in time and give rise to different claims, and even to different lawsuits, does not necessarily imply that they are different claims. What is important is whether or not they derive from the same action or omission of the insured.

SCJ of 10 May 2006, EDJ 2006/65241, which rules on an insurance contract that, after defining what was considered to be a loss, defines the "unit of loss" as follows: "a single and unique event or series of harmful events due to the same original cause shall be deemed to constitute a single and unique loss, irrespective of the number of claimants or claims made."

The Judgment of the 1st Division of the Supreme Court of 15 February 2006 states that “there was only a single loss and not one for each of the affected dwellings, which is of particular importance when establishing the cover provided by the insurance policy, without prejudice to the fact that it may be the injured third party that brings the action”.

CONCLUSION: In the case of multiple claims, which can be classified as “a single loss”, the limit of the amount insured in the policy is applicable to the whole, not to each of the individual claims, and constitutes a possible defence against a direct action, when the compensation paid by the insurer up to that time has already reached the limit of the sum insured. This defence could be invoked against the injured third party, since the “insured sum” clause is not deemed to be a clause limiting the insured’s rights, but one that delimits the risk insured.

 José Garzón García 

Diretor do Departamento Direito dos seguros | Madrid (Espanha)

Belzuz Abogados SLP

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