PORTUGAL Law and Practice Contributed by: Leonor Futscher de Deus, Broseta Abogados, SLP
This system implies an effort from the policyholder/ insured to recall all circumstances that may affect the risk (facts that a normal person would reasonably con- sider relevant to the risk assessment). Insurer In turn, the Insurance Contract Law sets out some limits to this risk disclosure obligation. Firstly, it states that insurers must explain to policyholders/insureds the scope and consequences of such obligation before the conclusion of the policy, as the insurer may be liable for the damage arising from the breach of this duty otherwise. Notwithstanding the risk disclosure obligation from the policyholder/insured, the insurer should proactively seek relevant information that will allow it to carry out a proper risk assessment. In addition, in the event the insurer asks the client to fill in a questionnaire, the insurer should: • ensure that the questions allow for accurate and complete answers; • review the answers provided by the client to avoid any inconsistencies; and • ask for any clarification or additional information in the event the answers are incomplete, inaccurate or contradictory. Unless there is wilful deception by the policyholder/ insured, if the insurer accepts to underwrite the risk based on the statements provided by the policyhold- er/insured, the insurer cannot rely on incomplete or inaccurate answers, inconsistencies or other circum- stances known to the insurer to refuse the risk. Consumers Versus Professionals As a rule, the risk disclosure obligation applies to any policyholder/insured, regardless of their acting capac- ity. 6.2 Failure to Comply With Obligations of an
In the case of an intentional breach from the policy- holder/insured, the insurer may terminate the policy in a communication to the policyholder. If no claim has occurred, the communication must be sent within three months of the date on which the insurer became aware of the breach. The insurer is entitled to premi- ums: • due until the end of the three-month period, unless a deliberate action or gross negligence on the part of the insurer is discovered; or • due until the end of the policy in the event of inten- tional breach by the policyholder/insured aiming to obtain an illicit advantage. In the case of a negligent breach, the insurer may ‒ in communication with the policyholder ‒ within three months of when the insurer became aware: • propose amendments to the policy, establishing a deadline of no less than 14 days for the policyhold- er to approve or, if allowed, to provide a counter- offer; or • terminate the policy, if the insurer can prove that it never enters into policies covering the risks relating to the facts omitted or inaccurately stated. The policy will terminate within 30 days of the insurer’s notice or, if the insured fails to respond to the amend- ment proposed by the insurer, within 20 days. Pre- miums will be returned on a pro rata temporis basis. Insurer In the event the insurer fails to provide the policy- holder/insured with: • information about the risk disclosure obligation before the conclusion of the policy, it may be liable to the policyholder/insured for the damages arising therefrom; • mandatory pre-contractual information (eg, cover- age, exclusions or premiums), the policyholder will be entitled to terminate the policy (and to receive premium reimbursement) within 30 days of receipt of the policy, unless the lack of information has not affected the policyholder’s decision to conclude the policy or a claim was triggered by a third party (the lack of pre-contractual information may also
Insurance Contract Policyholder/Insured
The Insurance Contract Law provides for different solutions depending on the nature of the breach to comply with the risk disclosure statement.
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