Can the insured recognize its liability under a civil liability policy?

By: Abg. Miguel Ángel Saltos, Mgs.

Introduction

In this article we will analyze the legal concept of civil liability and the prohibition of policyholders from recognizing their responsibility within the framework of the stipulations of civil liability insurance contracts.

Guillermo Cabanellas in his legal dictionary defines civil liability as “ the obligation to compensate, as far as possible, the damage caused and the damages inferred by oneself or by a third party, and without cause to excuse it. ” Along the same lines, Fernando Vidal [1]considers that the determining factors of liability are the damage caused and the causal link in relation to the harmful event and the subject who is required to respond. That is why it can be said that civil liability is the legal duty that a natural or legal person has to offer, as compensation, reparation or compensation for the damages caused by their action or omission to another person.

A general look at civil liability policies

As can be deduced, both companies and professionals by virtue of the exercise of their activities have the possibility of having to assume risks derived from their actions towards third parties. Thus, civil liability insurance plays a very important role, because it financially covers the insured against any damage that may be caused to third parties involuntarily by their actions, as long as they are within the coverage parameters determined in the policy. The Commercial Code of Ecuador regarding this type of insurance tells us:

Art. 752.- In civil liability insurance, the insurer must satisfy, within the limits established in the contract, the pecuniary compensation that, in accordance with the laws, the insured is obliged to pay, as civilly responsible for the damages. caused to third parties, by events provided for in the contract.

Contractual and non-contractual liability are insurable, as is gross negligence .

From reading the recently described rule, we see that in this type of insurance several duties arise for the insured, some established by law and others by agreement of the parties. Regarding legal obligations, in particular we have that in the Commercial Code between articles 752 and 758 some provisions are established that are applicable to civil liability policies, identifying various duties for the insured. For the purposes of this document, we are going to refer to the prohibition of the insured from assuming responsibility for actions that cause damage to third parties. Article 756 of the aforementioned norm says:

Art. 756.- The insured is prohibited, under penalty of loss of the right to compensation, from carrying out transactions, extrajudicial arrangements or any other act that tends to recognize their responsibility, without prior and express approval of the insurer. However, this prohibition does not apply in the event that the insured is compelled to testify judicially under oath about the facts constituting the incident.

The various legal implications arising from the failure of the insured to fulfill its obligations are intrinsically linked to the risk and its status within the insurance contract. Civil liability insurance is classified as part of property insurance, since it focuses on the possible financial impact of the insured as a result of causing damage to third parties due to events that generate civil liability. From this approach arises the particularity that the beneficiary is a different entity from the insured.

Between the insured and the third party victim, who is also the potential beneficiary, a civil liability relationship is established in which the insurer positions itself as a third party whose assets could be at risk under the insurance contract. This situation can lead the insured to face the occurrence of the risk in a negligent manner, which contravenes the duty of care for the risk that is manifested as one of the objectives of the insured’s obligations after the occurrence of the incident.

Given that the insurer’s assets may be affected by the actions taken by the insured and the beneficiary, the prohibition established in article 756 of the Commercial Code is understandable, which seeks to prevent damages that could arise from possible collusion between the insured and the beneficiary. the third party/beneficiary. On the other hand, it is intended to establish a mechanism so that the insurer’s liability does not exceed the true magnitude that the incident would have if the insured had acted diligently at the time of the incident. This situation is in total accordance with the legal consequence that naturally derives from the prohibition of carrying out said collusion.

For companies in general, these types of policies are a convenient tool, because they are mechanisms that allow a third party to assume their obligations for the consequences of their actions or omissions.

Legal consequences of the recognition of responsibility of the insured

Once an incident has taken place that could be considered a possible incident within the civil liability insurance contract, since it implies the realization of the insured risk, it could happen that the insured admits its liability to the third party for said incident. However, it is important to highlight that this admission by the insured does not constitute definitive evidence of the occurrence of the insured risk or the amount of damage caused.

Likewise, it is feasible for the insured to reach a conciliation or transaction agreement with the affected third party. In this case, it is relevant to underline that this agreement should not have significant adverse effects for the insurer under the insurance contract.

Suppose that, in a liability insurance contract, an insured individual is involved in a traffic accident where he is deemed responsible for damage to another vehicle. The insured, recognizing his fault in the accident, together with the driver of the other vehicle reach an agreement to cover the damages without resorting to litigation, this should not have a significant adverse impact on the insurer as established in article 756 of the Commercial Code.

When the insured reaches a settlement or conciliation agreement with the beneficiary, this agreement cannot be invoked against the insurer. This is because the insurer is a third party with respect to that contract and, therefore, such an agreement does not have the capacity to generate legal consequences for the insurer without its consent.

Conclusion

When we evaluate the obligations that must be fulfilled by the insured in civil liability policies in the event that an incident occurs, we observe that these obligations reflect the fundamental compensation principle of the insurance contract. Its purpose is to ensure that the insured allows the insurer to know in a timely manner the occurrence of the loss, exercise its rights to make the payment of compensation, take measures to prevent the extension of the loss and, in some cases, require that the insured take these measures. measures. All of this is related to the compensation principle, a central aspect in the insurance contract, which is the compensation of losses derived from the incident, without generating undue enrichment for the insured or the beneficiary.

Furthermore, it is important to note that these obligations are subject to a legal framework in which, if they are not fulfilled, the insurer has the power to deduct the value of the damages caused by said non-compliance from the compensation.

This restriction, like the other responsibilities of the insured after the incident, is intended to maintain the compensatory nature of the payment that the insurer must make. Specifically, it seeks to ensure that the insured does not impose liability on the insurer that exceeds what actually results from the realization of the risk.

——————

[1]Vidal Ramírez, Fernando. Civil liability . 2001.