More on proportional liability in property insurance

The article refers to the principle of proportion in property insurance, according to which, in the case of a partial loss the insurer is liable for such part of the loss as the amount of the sum insured bears to the value of the insured property. The author polemics with some theses expressed in the Supreme Court judgement of 17 March 2023 r. and one of the conclusions of the gloss to that judgement. Firstly, according to the author the principle of proportion generally applies to commercial insurance policies and should not be treated as exceeding the freedom of contract. Secondly, the principle of proportion may not refer to the damages paid by the insurer but only to the extent of its liability. In the former case the insurer could take a premium accordingly to the sum insured without bearing the risk of the payment of this sum. Thirdly, in case of a policy renewal, the circumstances are relevant. If the precedent insurance contracts were concluded without such a clause and the policyholder express the will of exceeding the insurance on the same conditions, introducing the principle of average without communicating it to the policyholder may result in the liability of the insurance distributor and, in certain cases, the invalidity of the proportional liability principle. Fourthly, the proportion rule is also allowed in consumer policies, but it must be known to the policyholder. Otherwise, in certain circumstances, the average principle may be treated as unfair contract clause.