New case law in Cyprus regarding the refusal of insurance coverage for a road accident (Civil Appeal No. 267/20, 23/1/2025)
Introduction
In the recent decision No. 267/2020 dated 23/1/2025, the Supreme Court addressed the principles governing the rectification of insurance documents, particularly vehicle insurance policies, and the circumstances under which such errors do not constitute mutual mistakes, thereby allowing the insurer to deny coverage.
Case Facts
The Appellant was involved in a road accident with a vehicle that was insured by the Appellee. The insurance company denied the coverage for the accident, arguing that the chassis number recorded in the insurance policy differed from the chassis number of the vehicle involved in the accident. Both the insured vehicle and the one involved in the accident were of the same car vehicle brand, model and color and their chassis numbers were similar but slightly different.
It was noted that the Appellant’s vehicle had been imported to Cyprus with a purchase invoice and a Registration Certificate that did not correspond to this vehicle but instead referred to another vehicle of the same vehicle brand and model which was the one insured by the insurance company.
The Appellant argued that the discrepancy in the chassis number on the insurance policy was due to a mutual mistake and requested that the court rectify the policy to reflect the true intention of the parties. He further claimed that the shared intention was to insure the vehicle he had actually purchased and was driving and that the reference to a different chassis number was a mutual error.
The insurance company denied the existence of any mistake asserting that it had insured the vehicle based on the details provided to it. It contended that the insurance policy covered a different vehicle and that there was no reason for rectification since the policy was issued based on the information originally submitted by the insured.
Supreme Court Decision
The Supreme Court dismissed the appeal. It ruled that the Appellant had applied for insurance coverage for a vehicle with a specific chassis number, and the insurance company acted based on the details provided. Since two similar vehicles existed with different chassis numbers, the court concluded that this was not a mere typographical error but a case involving distinct vehicles.
According to the court, the vehicle for which the Appellant applied for insurance was the one described in the Registration Certificate, which was an actual and existing vehicle. The Appellant, when applying for insurance, did not physically present or identify the vehicle to the insurer but instead relied on the chassis number recorded in the documents he submitted—the registration certificate. The insurance company insured exactly what the Appellant requested. The insurer provided coverage based on the title of ownership as submitted, meaning the details presented to them. Therefore, there was no question of incorrect recording in the Insurance Certificate or a typographical error. In other words, there was no mutual mistake. The insurer insured exactly what the Appellant requested.
The ruling made reference to the legal principles governing the rectification of documents. According to the Court:
Conclusion
This decision clarified that insurance companies are bound by the information provided to them at the time of issuing an insurance policy. It also reaffirmed the importance of accuracy in insurance contracts and the high burden of proof required for rectifying insurance documents. Additionally, it confirmed that the remedy of rectification is available only when there is indisputable evidence that the parties had a mutual intention that was not properly reflected in the document. The ruling underscores the significance of precision in recording details when signing insurance contracts and highlights that rectification claims must be supported by strong evidence of the parties’ true intentions.
By Stavri Kosiari
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