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Questions & answers on paying insurance premiums

What happens if the policyholder is in default with payment of his premiums and what consequences does that have in the event of a claim?

Statutory provisions on this are found in sections 37 and 38 of the Insurance Contract Act (Versicherungsvertragsgesetz – VVG). If the policyholder does not pay the first premium on time, the insurer may withdraw from the contract as long as the payment has not been made. That does not apply if the policyholder proves that they are not responsible for the delay in the payment. In the event of withdrawal, the insurer may request payment of the costs of medical examinations performed as part of the health check.

If the first premium has not yet been paid when the insured event occurs, the insurer has no obligation to perform provided that it has drawn attention to this legal consequence by separate notification in text form or by a conspicuous notice provided in the insurance policy. However, a performance obligation does exist if the policyholder proves that they are not responsible for the failure to pay.

If a subsequent premium or other amount owed by the policyholder under the insurance relationship is not paid on time (or if it was not possible to debit the same on time), the policyholder will receive a formal reminder from the insurer in text form stating a payment period of at least two weeks. If the policyholder does not settle such arrear within the appointed period, the insurance coverage lapses or is reduced. The insurer must make explicit reference to such legal consequences in the reminder.

My insurer increased the premium without stating the reasons for this. Do I have the right to request information about that?

Yes. Reasons must be stated for an increase in premium. If customers do not know the reasons, they cannot assess what rights this entails for them. In the event of a premium increase, the policyholder normally has a right to extraordinary termination provided that the insurance coverage has not changed. However, the obligation to state reasons does not a detailed breakdown of the increase.