In a judgement of 22 February 2022, the Spanish Supreme Court upheld the appeal filed by Generali Seguros, lowering the amounts to be paid by the insurer to its insured in a very significant way, in application of the equity rule provided for in article 10 of the Insurance Contracts Law. Generali was represented by partner and head of the Insurance and Reinsurance practice at Pérez-Llorca Joaquín Ruiz Echauri.
Primafrio did not to agree on the modification of the conditions and Generali communicated the cancellation of the policy. Primafrío filed a lawsuit against Generali, in which it requested that the insurer be ordered to pay 3,629,616.98 €, plus the interest of art. 20 of the Insurance Contract Law, for the claims that occurred during the term of the policy and were not compensated by the insurer. Generali considered that it should only pay for claims occurring before the termination of the contract, amounting to €301,726.81, and also in the alternative, that if subsequent claims were to be considered as compensable, the rule of proportionality provided for in Art. 10.3 L.L. should be applied and the compensation reduced to €801,696.23.
After both the Court of First Instance of Molina de Segura number 1 and the Provincial Court of Murcia ruled in favour of the plaintiff, obliging the insurer to pay the requested amount, Generali filed a cassation appeal before the Supreme Court, arguing that the judgement had infringed the provisions of article 10 of the Insurance Contracts Law.
The Supreme Court ruling states that the declared risk did not coincide with the contracted risk, so that the rule of proportionality (or equity) foreseen in section 3 of the aforementioned article 10 is applicable. That is to say, the liability of the insurer must be reduced to the same extent as the premium that it would have received if the policy holder had correctly declared the risk, so the compensation has been finally reduced invoking the equity rule to circa €801K, with the legal interest (plus 2 points) and without legal fees.
Primafrio was represented by Patricio Martínez, from Murcia-based law firm Garay Abogados.