Underinsurance

A underinsurance is in property insurance or life insurance if the sum insured at the time of the insured event is considerably lower than the insurance value . The opposite is overinsurance .

General

Under- or over-insurance is only available for property or damage insurance. They follow the principle that the insured value should correspond to the sum insured. The full value insurance is therefore the normal form provided by law. Therefore the principle applies

${\displaystyle Versicherungssumme=Versicherungswert}$.

Only then will the policyholder receive full compensation for the property damage incurred . The insurances that meet this principle are called full-value insurance, with them the ratio between the sum insured and the insured value is equal to 1. With them, the full insured value is agreed as the insured sum. If there is no sum insured, conceptually there can be neither under- nor over-insurance.

calculation

If the sum insured and the insured value do not match, there is under- or over-insurance. If the sum insured is less than the insured value, there is underinsurance ( § 75 VVG ):

${\displaystyle Versicherungssumme<Versicherungswert}$.

If the sum insured is greater than the insured value, there is overinsurance ( Section 74 VVG):

${\displaystyle Versicherungssumme>Versicherungswert}$.

Both have an impact on the insurance compensation in the event of an insured event. The result of underinsurance is that in the event of an insured event, the insurance compensation may only be calculated proportionally, which means that a high level of responsibility is transferred to the policyholder.

The formula for compensation is:

${\displaystyle {\text{Entschädigung}}={\text{Schaden}}\cdot {\frac {\text{Versicherungssumme}}{\text{Versicherungswert}}}}$.

This formula of the proportionality rule is used to assess whether and to what extent there is significant under- or over-insurance.

Legal issues

The legal question of under- or over- insurance is only important in the event of an insured event. According to § 75 VVG, the insurer is only obliged to provide benefits to the extent that it corresponds to the ratio of the sum insured to the insured value. The insurer can only raise this objection of underinsurance if underinsurance or overinsurance is significant , i.e. more than 10%. The policyholder will not receive full compensation for the damage even if it is less than the sum insured. If, on the other hand, the underinsurance is insignificant, the insurer must reimburse the full damage up to the insured amount.

example

A fire- insured single-family home is completely destroyed by fire and had an insurance value of 300,000 euros before the fire, the sum insured was only 280,000 euros, so it was underinsured. The insurer has to reimburse the damage in full because the underinsurance of 7% was not significant. However, if the sum insured was 240,000 euros (underinsurance: 20%), he only needs to pay 224,000 euros due to the importance.

In the event of significant overinsurance (again more than 10%), both the insurer and the policyholder can request that the sum insured be reduced to the insured value (Section 74 (1) VVG). The insurance contract is void , however , if the policyholder wishes to obtain an illegal financial advantage from overinsurance ( fraudulent overinsurance ; Section 74 (2) VVG). In the case of underinsurance, on the other hand, there is no statutory increase in the sum insured because the policyholder cannot be charged higher insurance premiums against his will .

Underinsurance waiver

In the case of commercial , household contents or residential building insurance, the insurer can waive his statutory objection of underinsurance in the insurance contract. In the event of an insured event, he will waive the checking of the sum insured and the insured value and assume the damage up to the sum insured.

economic aspects

The amount of the insurance premium depends on the sum insured. Therefore, over- or under-insurance may arise that the insurance value from the outset, above or below the market value , market value or value is an insured object. In the event of underinsurance, the policyholder could endeavor to pay the lowest possible premium and is therefore willing to accept underinsurance ( initial underinsurance ). In doing so, however, he accepts the risk of not being reimbursed for the full damage in the event of an insurance claim. However, increases in value can also occur during the insurance relationship ( e.g. in the case of real estate due to an increase in value or through additional purchases to an insured entity ) if the sum insured remains the same, which results in underinsurance ( subsequent underinsurance ). In order to prevent the insured amounts remain constant at value increases, there are at buildings the sliding when new factor by which the sum insured to the construction price index is coupled. A provision insurance means that the risks that arise after taking out liability insurance are also insured under the existing insurance contract.

Conversely, there is overinsurance through subsequent depreciation or the sale of insured items. This leads to an excessive premium payment to the insurer. Only the impaired lower damage is compensated. An insurance that was taken out as overinsurance ( initial overinsurance ) may have become a full-value insurance due to a subsequent increase in value or a reduced sum insured.

literature

• Literature on underinsurance in the catalog of the German National Library

Individual evidence

1. ↑ Walter Große / Heinz Leo Müller-Lutz / Reimer Schmidt (eds.), Gabler Versicherungsenzyklopädie , Volume 3: Rechtslehre des Versicherungswesens , 1991, p. 150
2. ^ Albert Ehrenzweig, German (Austrian) Insurance Contract Law , 1952, p. 247
3. ^ Jörg Freiherr Frank von Fürstenwerth / Alfons Weiß, VersicherungsAlphabet (VA) , 2001, p. 342
4. ↑ Springer Fachmedien Wiesbaden (ed.), Gabler Kompakt-Lexikon Wirtschaft , 2013, p. 472
5. ↑ Winfried Schnepp / Horst Baumann / Roland Michael Beckmann / Katharina Johannsen / Ralf Johannsen (eds.), Large Commentary on the Insurance Contract Act , Volume III, 2010, p. 34
6. ↑ Frank Baumann / Hans-Ludger Sandkühler, The new Insurance Contract Act , 2008, p. 100
7. ↑ Winfried Schnepp / Horst Baumann / Roland Michael Beckmann / Katharina Johannsen / Ralf Johannsen (eds.), Large Commentary on the Insurance Contract Act , Volume III, 2010, p. 26
8. ↑ Frank Baumann / Hans-Ludger Sandkühler, The new Insurance Contract Act , 2008, p. 100
9. ↑ Ernst Bruck / Hans Möller (eds.), Commentary on the Insurance Contract Act , Volume II, 1980, p. 324
10. ↑ Ernst Bruck / Hans Möller (eds.), Commentary on the Insurance Contract Act , Volume 2, 1980, p. 353

Please note the information on legal issues!