Legal expenses insurance coverage despite choice of own lawyer

Legal expenses insurer Achmea rejected a request for reimbursement of lawyer’s fees because the insured had reported too late and had already engaged his own lawyer. The insured successfully challenged this rejection before the Kifid disputes committee. Despite the fact that the insured had engaged its own lawyer without Achmea’s prior consent, the lawyer’s fees were covered by the policy. Achmea had to reimburse the insured the maximum lawyer’s fees.

This issue also came up in a ruling by the disputes committee Kifid on 3 June 2024 following a procedure started by a consumer. Legal expenses insurer Achmea refused coverage because the three-year limitation period for filing the claim would have expired. Thereby, the insured would have reported the claim under the policy too late. Coverage was further refused because the insured conducted proceedings with its own lawyer during those three years without the prior consent of the insurer.

Limitation of a claim under the insurance contract

In principle, under the law, coverage from an insurance claim lapses if the insured does not raise the alarm with the insurer within three years of the occurrence. This is set out in Article 7:942 of the Civil Code: “A legal claim against the insurer to make a payment shall lapse three years from the start of the day following the day on which the person entitled to payment became aware of its claimability“.

However, the limitation period can be interrupted by an insured. Interruption of the limitation period means that the limitation period (in this case 3 years) starts running again. This therefore involves an active act by the insured: “The limitation period is interrupted by a written communication, claiming for benefits. A new limitation period of three years starts to run from the start of the day following the day on which the insurer either acknowledges the claim or has unequivocally communicatedits rejection.”

For the interruption of the limitation period in insurance products, there is another special rule: “the limitation period shall be interrupted by any negotiation between the insurer and the person entitled to benefits or the injured party“.

This article of law defines what is required for a claim from the insurance contract to be time-barred. Namely, the limitation period starts on the day the consumer’s need for legal assistance arises. In addition, this article of law also addresses how the limitation period can be interrupted so that it starts running again.

Disputes committee ruling

In the matter discussed, the consumer reported the legal proceedings in which he had incurred lawyer’s fees to his legal expenses insurer almost three years after the fact. On top of this, he also conducted court proceedings with his own lawyer. As a result, reimbursement of the submitted lawyer’s fees was refused by the legal expenses insurer.

With regard to the insurer’s invocation of the limitation period, the committee ruled that the consumer’s claim was not time-barred because the measurement moment for the start of the limitation period was at a later time than the insurer claimed. In this case, the measuring moment for the start of the limitation period was not when the insured initiated an investigation (as the insurer claimed), but was when a dispute arose and the consumer sought legal advice. This meant that there was no prescription because the consumer had still acted within the three-year limitation period.

The legal expenses insurance company’s argument that the consumer had engaged its own lawyer without permission was also rejected. The committee ruled that a complete rejection of the claim on this ground would be unreasonable. This was despite the fact that the insurance contract stated that engaging a lawyer on one’s own initiative and without the insurer’s approval was not allowed. For the insurer, the consumer’s self-setting of the lawyer did not result in a disadvantage, the committee said. After all, the consumer’s procedure would be covered by the policy AND the consumer would be entitled to a free choice of lawyer. The lack of prior consent, did not alter this. The commission awarded compensation of €16,000, equal to the cost ceiling of the insurance policy.

Practice shows that legal expenses insurers more often refuse coverage of a claim under the policy on incorrect grounds. In this case, therefore, unjustified.

Get advice

Do you have any questions? Then contact one of our lawyers by mail, telephone or fill in the contact form for a free initial consultation. We will be happy to think along with you.