What are the conditions for terminating insurance contracts?
As a rule the parties to the contract (policyholder and insurer) are free to determine the term of the insurance contract. When the conditions are met, the contract may be terminated by ordinary or extraordinary termination or based on a special termination right provided for by statute. The termination options provided for by contract are frequently set out in the general terms and conditions of insurance. Please refer to the terms and conditions that your insurer has sent you. The right to termination may also be established in statute directly (e.g. extraordinary termination without notice pursuant to section 314 of the German Civil Code (Bürgerliches Gesetzbuch – BGB) or extraordinary termination pursuant to section 92 and 111 of the German Insurance Contract Act (Versicherungsvertragsgesetz – VVG) as well as the special right of termination pursuant to section 11 (4) of the VVG and, in the case of mandatory motor vehicle insurance, section 5 (5) of the Compulsory Insurance Act (Pflichtversicherungsgesetz – PflVG)).
In general, section 11 of the VVG sets forth the following requirements for termination of an insurance contract:
• the notice period for termination must be equally long for both parties to the contract. It may not be less than one month and not more than three months (section 11 (3) of the VVG);
• an insurance contract entered into for an indefinite period may normally be terminated by either party to the contract only before the end of the current insurance period (section 11 (2) of the VVG);
• where an insurance contract has been concluded for a term of more than three years, the policyholder has a special right of termination pursuant to section 11 (4) of the VVG already from the end of the third insurance year and thereafter before the end of each following insurance year (with a notice period of three months).
If it has been agreed in the insurance contract that it is valid exclusively during a certain period after which it ends automatically, express notice of termination is not required. Insurance contracts which are concluded for a certain period of time and are automatically renewed for a maximum of one year based on the general terms and conditions of insurance are extended from one year to the next (renewal clause) unless they are terminated (section 11 (1) of the VVG).
Special provisions apply to life and health insurance.
When can I revoke my insurance contract? What time limits do I have to observe?
Generally, the policyholder may revoke their declaration of intent within 14 days (and within 30 days for life insurance, cf. sections 8 and 152 of the German Insurance Contract Act (Versicherungsvertragsgesetz – VVG)). The revocation period commences as soon as the policyholder has received in text form the insurance policy, the terms and conditions of contract (including the general terms and conditions of insurance), the contract information prescribed by statute as well as the instruction regarding their right of revocation. No reasons need to be stated for revocation.
Do I have a right to extraordinary termination if the insurer increases my premium?
As a general rule, the policyholder is entitled to extraordinary termination of the contract if the insurer increases the premium on the basis of an adjustment clause (sections 40, 205 (4) of the Insurance Contract Act (Versicherungsvertragsgesetz – VVG). However, this only applies if the premium is increased without the scope of insurance cover being changed accordingly. Time limit: within one month of receipt of the change notice with effect from the effective date of the increase.
Is the insurer required to confirm a notice of termination by the policyholder in writing?
No. Normally, the terminating policyholder has the burden of proving that the insurer has received the termination notice (for example by sending the termination notice by registered letter with acknowledgement of receipt). However, the insurer may be required by the principle of good faith to immediately reject an invalid termination.