Court of Justice ruling on transparency of terms in consumer insurance contracts

07-05-2015

European consumers are protected against unfair terms in consumer contracts, including insurance contracts. However, this protection does not extend to terms setting out the essential elements of a contract, such as the extent of the risk covered and the amount of the insurance premium. Nevertheless, if the term under scrutiny is not drafted in 'plain, intelligible language', a court may proceed to evaluate its fairness. The Court of Justice of the EU clarified the concept of 'plain, intel-ligible language' in a recent decision, stating that a term in a contract can be qualified as such only if it allows an average consumer actually to understand the economic consequences of the term.

European consumers are protected against unfair terms in consumer contracts, including insurance contracts. However, this protection does not extend to terms setting out the essential elements of a contract, such as the extent of the risk covered and the amount of the insurance premium. Nevertheless, if the term under scrutiny is not drafted in 'plain, intelligible language', a court may proceed to evaluate its fairness. The Court of Justice of the EU clarified the concept of 'plain, intel-ligible language' in a recent decision, stating that a term in a contract can be qualified as such only if it allows an average consumer actually to understand the economic consequences of the term.