Published On: Fri, Nov 23rd, 2018

Limited insurance coverage invalid on the French side, court rules

NAGICO Insurances building

PHILIPSBURG – The Common Court of Justice has ordered insurance company Nagico to pay close to $499,000 to a local company for a traffic accident that took place in 2000 on the French side. The court ruled that the limitation clause in Nagico’s car insurance policies is invalid on French territory.

Car insurance in cheaper on the Dutch side of St. Maarten, mainly because Nagico has limited its liability to 90,000 guilders. That clause does not hold up if someone with a Dutch-side insurance gets involved in an accident on the French side, it appears from the November 16 court ruling.

The French Insurance Code has made a clear choice for the protection of injured parties in traffic accidents, not only by making insurance mandatory but also by prohibiting limitations on the coverage for personal injuries.

The legislator in St. Maarten has opted to allow a limitation on coverage. “This choice has also been made in the interest of victims,” the court ruling points out. The objective of the legislator was to achieve a higher number of insured motorists; limiting the insurance company’s liability to 90,000 guilders allowed insurers to charges lower premiums.

If the choice the Dutch-side legislator made would have a direct effect on French law it would “create a serious imbalance in the French insurance system,” the court ruling states. “This is even more so because of the intensive traffic between both parts of the island.”

Nagico went to court to have a ruling of the Cour d’Appel de Basse-Terre recognized. This French court ruled on February 18, 2010, that the company and Nagico were jointly liable for the damages. The company’s paid at the time the full amount of damages to the accident-victim, while Nagico only paid out 90,000 guilders; the damages amounted to around €503,000. The French court rejected the company’s claim on Nagico for this amount.

But the Common Court of Justice, after having established in minute detail that it is authorized to handle a court ruling from a foreign jurisdiction, voided the decision by the Cour d’Appel. The only argument in the French decision to deny the company’s claim is that “there is no reason to grant it,” the Common Court of Justice ruling states.

“This is remarkable because the same court granted the claim in a ruling dated April 21, 2008,” the court noted.

The bottom line of the court ruling is that insurance companies cannot call on limited coverage for personal injuries when that accident happens on the French side of the island.

The court has a clear opinion about this: “It is of little value to oblige motorists to take insurance against liability risks from traffic accident and to allow on the other hand unlimited restrictions.”

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