No C 190/2 Official  Journal  of the  European  Communities 28. 7. 79 
II 
(Preparatory  Acts) 
COMMISSION 
Proposal  for  a Council  Directive  on  the  coordination  of laws,  regulations  and 
administrative  provisions  relating  to insurance  contracts 
(Submitted  by  the Commission  to the Council  on 10 July  1979) 
THE  COUNCIL  OF THE  EUROPEAN 
COMMUNITIES, 
Having  regard  to  the  Treaty  establishing  the 
European  Economic  Community,  and  in particular 
Articles  57 (2) and  66 thereof, 
Having  regard  to the proposal  from  the Commission, 
Having  regard  to the  opinion  of the  European  Par-
liament, 
Having  regard  to the  opinion  of the  Economic  and 
Social  Committee, 
Whereas,  pursuant  to the  Treaty,  any  discrimination 
in relation  to the  provision  of services  which  is based 
on the  fact  that  an undertaking  is not  established  in 
the Member  State  in which  the  service  is provided  has 
been  prohibited  since  the  end  of the  transitional 
period;  whereas  this  prohibition  applies  to services 
provided  from  any  establishment  in the  Community, 
whether  it is the head  office  of an undertaking  or an 
agency  or branch; 
Whereas  the  second  Council  Directive  ./EEC 
of ...  on the  coordination  of laws,  regulations  and 
administrative  provisions  relating  to direct  insurance 
other  than  life  assurance  and  laying  down  provisions 
to facilitate  the  effective  exercise  of freedom  to 
provide,  services,  granted  the  parties  freedom  to 
choose  the  law  applicable  to the  contract,  firstly  in 
the case  of risks  classified  as transport,  primarily  on 
account  of their  frequently  international  character, 
and secondly  in the  case  of certain  risks  which  are 
defined  by precise  criteria  in respect  of which  there  is 
less need  of protection  for insured  persons; Whereas,  however,  pending  subsequent  coordination 
of national  rules  governing  insurance  contracts,  that 
Directive  maintained  in respect  of other  risks  the 
principle  of the  application  of the  law  in force  in the 
State  in which  the  risk  is situated;  whereas  such 
coordination,  by establishing  a balance  between  the 
interests  of the  insurer  on  the  one  hand  and  the 
protection  of the  policyholder  and  the  insured  person 
on the  other,  is likely  to enable  freedom  of choice  to 
be extended  and  thus  to facilitate  the  exercise  of 
freedom  to provide  services; 
Whereas  it was  considered  advisable  to exclude  from 
the scope  of the  Directive,  marine,  aviation  and 
transport  insurance  because  of their  widely  inter-
national  character  and  the  freedom  traditionally 
allowed  to the  parties  in concluding  such  contracts; 
whereas  the  credit  and  suretyship  insurance  classes 
display  peculiarities  which,  pending  subsequent  coordi-
nation,  justify  not  making  them  subject  to the 
provisions  of this  Directive  as they  stand; 
Whereas  among  the  fundamental  problems  posed  by 
legislation  on  insurance  contracts  are  the 
consequences  resulting  firstly  from  the conduct  of the 
policyholder  at the  time  of the  conclusion  and  in the 
course  of the  contract  concerning  the  declaration  of 
the risk  and  of the  claim,  and  secondly  his  attitude 
with  regard  to the  measures  to be taken  in the  event 
of a claim; 
Whereas  it is also  necessary  to regulate  certain 
general  questions  relating  in  particular  to  the 
existence  of cover  depending  on the  payment  of the 
premium,  the  duration  of  the  contract,  and  the 
position  of  insured  persons  who  are  not 
policyholders; 
28. 7. 79 Official  Journal  of the  European  Communities No C 190/3 
Whereas,  as regards  the  problems  regulated  in this 
Directive,  Member  States  may  be authorized  to adopt 
different  solutions  only  where  this  is expressly 
provided  for  in the text  of the  Directive;  whereas  any 
other  approach  would  call  into  question  the objectives 
of the  Directive;  whereas,  however,  there  is nothing 
to prevent  the  parties  from  derogating  from  the 
provisions  adopted  pursuant  to  the  Directive, 
provided  that  such  derogations  favour  the 
policyholder,  insured  person  or third  party. 
HAS  ADOPTED  THIS  DIRECTIVE: 
Article  1 
The object  of this  Directive  is to coordinate  the 
fundamental  laws,  regulations  and  administrative 
provisions  governing  insurance  contracts  relating  to 
one of the  classes  contained  in point  A of the  Annex 
to Directive  73/239/EEC  of 24 July  1973  on the 
coordination  of laws,  regulations  and  administrative 
provisions  relating  to the  taking-up  and  pursuit  of the 
business  of direct  insurance  other  than  life  assurance 
('), with  the  exception  of the  classes  contained  in 
points  4 (railway  rolling  stock),  5 (aircraft),  6 (ships 
(sea,  lake  and  river  and  canal  vessels)),  7 (goods  in 
transit),  11 (aircraft  liability),  12 (liability  for  ships 
(sea,  lake  and  river  and  canal  vessels)),  14 (credit) 
and 15 (suretyship). 
Article  2 
1. Every  insurance  contract  shall  give  rise  to the 
issue  to the  policyholder  of a document  containing  at 
least  the following  information: 
(a) the  name  and  address  or head  office  of the 
contracting  parties; 
(b) the  subject  matter  of  the  insurance  and  a 
description  of the risks  covered; 
(c) the  amount  insured  or the  method  of calculating 
it; 
(d) the  amount  of the premium  or contribution  or the 
method  of calculating  it; 
(e) the  dates  on which  premiums  or contributions  fall 
due; 
(f) the  duration  of the  contract  and  the  times  at 
which  cover  commences  and  expires  and,  where  it 
applies,  the time  of automatic  renewal. 
(') OJ No L 228,  16. 8. 1973,  p. 3. 2. Pending  the  issue  of such  a document,  the 
policyholder  shall  be entitled  to receive,  at the earliest 
opportunity,  a document  which  attests  to  the 
existence  of an insurance  contract  and  contains  at 
least  the  information  referred  to in paragraph  1 (a), 
(b) and  (c). 
3. If,  after  the  contract  has  been  concluded,  any 
change  occurs  that  affects  the information  referred  to 
under  paragraph  1 (a) to (f),  the insurer  shall  furnish 
the policyholder  with  a document  notifying  such 
change. 
4. If  provisional  cover  is provided,  the policyholder 
shall  receive  a document  which  certifies  that  such 
cover  has  in fact  been  provided  and  which  contains  at 
least  the  information  referred  to in paragraph  1 (a), 
(b), (c) and  (f). 
5. The  documents  referred  to  in  the  above 
paragraphs  have  only  a probative  value. 
6. The  contract  shall  be drafted  in the  language  of 
the Member  State  whose  law  is applicable. 
However,  the  policyholder  shall  be  entitled  to 
stipulate  as a condition  precedent  to the  conclusion  of 
the contract  that  all  documents  relating  to  the 
conclusion,  amendment  and  performance  of  the 
insurance  contract  be translated  into  the  language  of 
his habitual  residence,  provided  such  language  is an 
official  language  of the Community. 
7. Notwithstanding  the  provisions  of this  Article, 
the laws  of the  Member  States  may  authorize  a 
simplified  form  for  insurance  contracts  concluded  for 
a short  period  and  for  bearer  policies. 
Article  3 
1. When  concluding  the  contract,  the  policyholder 
shall  declare  to the  insurer  any  circumstances  of 
which  he is aware  which  may  influence  the  insurer's 
assessment  or  acceptance  of  the  risk.  The 
policyholder  shall  not  be obliged  to declare  to the 
insurer  circumstances  which  are  already  known  to the 
latter  or  which  are  common  knowledge.  Any 
circumstance  in respect  of which  the  insurer  has 
asked  specific  questions  in writing  shall,  in the 
absence  of proof  to the  contrary,  be regarded  as 
influencing  the assessment  and  acceptance  of the risk. 
2. (a) If circumstances  which  were  unknown  to both 
parties  when  the  contract  was  concluded  come 
to light  subsequently,  or if the policyholder  has 
failed  to fulfil  the  obligation  referred  to in 
paragraph  1, the  insurer  shall  be  entitled, 
within  a period  of two  months  from  the  date 
No C 190/4 Official  Journal  of the  European  Communities 28. 7. 79 
on which  he becomes  aware  of the  fact,  to 
propose  an amendment  to the contract. 
(b) (i)  The  policyholder  shall  be entitled  to a 
period  of 15 days  from  the date  on which 
he receives  the  proposal  for  an 
amendment  in which  to accept  or reject  it. 
If the  policyholder  rejects  the proposal  or 
fails  to reply  within  the  above  time  limit, 
the insurer  may  terminate  the  contract 
within  a period  of eight  days  by giving  15 
days'  notice. 
(ii) If the  contract  is terminated,  the  insurer 
shall  refund  to the  policyholder  the  pro-
portion  of the  premium  of the  period  for 
which  cover  is not provided. 
(iii) If a claim  arises  before  the  contract  is 
amended  or  before  termination  of the 
contract  has  taken  effect,  the insurer  shall 
provide  the agreed  cover. 
3. If  the  policyholder  has  failed  to fulfil  the 
obligation  referred  to in paragraph  1 and  may  be 
considered  to have  acted  improperly,  the  insurer  may 
terminate  the  contract  or propose  an  amendment 
to it. 
(a) The  insurer  shall  choose  either  to terminate  the 
contract  or to propose  an amendment  to it within 
two months  from  the  date  on which  he becomes 
aware  of such  facts.  Termination  shall  take  effect 
15 days  after  the date  on which  the  policyholder 
is notified  thereof  at his last  known  address. 
If the  insurer  has  proposed  an amendment  to the 
contract,  the  policyholder  shall  be  entitled  to 
accept  or reject  it within  15 days  from  the  date 
on which  he  receives  the  proposal  for  an 
amendment.  If  the  policyholder  refuses  the 
proposal  or  fails  to reply,  the  insurer  may 
terminate  the  contract  within  eight  days  by giving 
15 days'  notice. 
(b) If the  contract  is terminated  the  insurer  shall 
refund  to the  policyholder  the  proportion  of the 
premium  in respect  of the  period  for  which  cover 
is not provided. 
(c) If a claim  arises  before  the contract  is amended  or 
before  termination  of the  contract  has  taken 
effect,  the insurer  shall  be liable  to provide  only 
such  cover  as is in accordance  with  the  ratio 
between  the  premium  paid  and  the  premium  that 
the policyholder  should  have  paid  if he  had 
declared  the  risk  correctly. 4. If  the  policyholder  has  failed  to fulfil  the 
obligation  referred  to  in  paragraph  1 with  the 
intention  of deceiving  the  insurer,  the  latter  may 
terminate  the contract. 
(a) The  insurer  shall  take  such  action  within  two 
months  from  the  date  on  which  he  becomes 
aware  of such  facts; 
(b) by way  of damages,  premiums  paid  shall  be 
retained  by the  insurer  who  shall  be entitled  to 
the payment  of all premiums  due; 
(c) the  insurer  shall  not  be liable  in respect  of any 
claim. 
5. In  the  cases  referred  to in paragraphs  3 and  4, 
the burden  of  proof  of  fraudulent  or  improper 
conduct  on the  part  of the  policyholder  shall  rest  on 
the insurer. 
Article  4 
1. From  the  time  when  the  contract  is concluded, 
the policyholder  shall  declare  to the  insurer  any  new, 
circumstances  or changes  in circumstance  of which 
the insurer  has  requested  notification  in the  contract. 
Such  declaration  shall  be made  not  later  than  the  time 
when  the  risk  increases  where  this  is attributable  to an 
intentional  act of the  policyholder;  in all other  cases, 
it must  be  made  immediately  the  policyholder 
becomes  aware  of the increase. 
2. The  insurer  may,  within  two  months  of the  date 
on which  he was  notified  of the  increase  of the  risk, 
propose  an amendment  to the  contract  in accordance 
with  the procedure  laid  down  in Article  3 (2) (b). 
3. If  the  policyholder  has  failed  to fulfil  the 
obligation  referred  to in paragraph  1, such  failure  to 
give notice  shall  not  give  rise  to any  sanction  where  it 
relates  to a new  circumstance  or change  in circum-
stances  which  is not  liable  to  appreciably  and 
permanently  increase  the  risk  and  lead  to an increase 
in the premium. 
4. If  the  policyholder  has  failed  to fulfil  the 
obligation  referred  to in paragraph  1, the  insurer 
may,  within  two  months  of the  date  on which  he 
becomes  aware  of such  fact,  propose  an amendment 
to the  contract  in accordance  with  the  procedure  laid 
down  in Article  3 (2) (b). 
28. 7. 79 Official  Journal  of the  European  Communities No C 190/5 
5. If  the  policyholder  has  failed  to fulfil  the 
obligation  referred  to in paragraph  1 and  may  be 
considered  to have  acted  improperly,  Article  3 (3) 
shall  apply. 
6. If  the  policyholder  has  failed  to fulfil  the 
obligation  referred  to  in  paragraph  1 with  the 
intention  of deceiving  the  insurer,  the  latter  may 
terminate  the contract. 
(a) The  insurer  shall  take  such  action  within  two 
months  from  the  date  on  which  he  becomes 
aware  of such  fact; 
(b) by way  of damages,  any  premiums  paid  shall  be 
retained  by the  insurer  who  shall  be entitled  to 
the payment  of all premiums  due; 
(c) the  insurer  shall  not  be liable  in respect  of any 
claim  arising  after  the increase  of the risk. 
7. In  the  cases  referred  to in paragraphs  5 and  6, 
the burden  of  proof  of  fraudulent  or improper 
conduct  on the  part  of the  policyholder  shall  rest  on 
the insurer. 
Article  5 
Any  unjustified  payment  made  pursuant  to Articles  3 
and 4 shall  be refunded. 
Article  6 
If, while  the  contract  is in force,  the  risk  has 
diminished  appreciably  and  permanently  because  of 
circumstances  other  than  those  covered  by  the 
contract,  and  if this  justifies  a reduction  in the 
premium,  the  policyholder  shall  be  entitled  to 
terminate  the  contract  without  compensation  if the 
insurer  does  not  consent  to reduce  the  premium  pro-
portionately. 
The right  to  terminate  the  contract  shall  arise 
immediately  the  insurer  refuses  to  reduce  the 
premium  or,  where  he  fails  to  reply  to  the 
policyholder's  proposal,  after  a period  of 15  days 
following  such  proposal. 
Where  the  contract  is terminated,  the  insurer  shall 
refund  to the  policyholder  a proportion  of  the 
premium  corresponding  to the period  for  which  cover 
is not provided,  less  the administrative  costs  involved. 
Article  7 
Failure  to pay  a premium  or part  thereof  shall  be 
penalized  only  after  a period  of grace  of at least 15 days  has  elapsed  from  the  date  on  which  the 
policyholder  is notified,  in writing  and  after  the date 
on which  payment  is due,  of the penalty. 
This  provision  shall  not  apply  to any  failure  to pay 
the first  premium  or the  single  premium  of an annual 
contract  where  the  contract  or the  law  provides  that 
commencement  of cover  shall  be conditional  upon 
payment  of such  premium. 
Article  8 
1. If  a claim  arises,  the  policyholder  shall  take  all 
reasonable  steps  to avoid  or reduce  the  consequences. 
In particular,  instructions  from  the  insurer  or 
compliance  with  specific  provisions  on  this  point 
contained  in  the  contract  shall  be  considered 
reasonable. 
2. Any  costs  incurred  by the  policyholder  in per-
forming  the  obligation  referred  to in paragraph  1 
shall  be borne  by the insurer. 
3. If  the  insurer  is required,  under  the  contract,  to 
pay in respect  of only  part  of the  loss,  he shall  be 
obliged  to refund  only  a proportion  of the  costs 
referred  to in the  preceding  paragraph  unless  the 
policyholder  acted  on his instructions. 
4. If  the  policyholder  fails  to comply  with  the 
provision  laid  down  in paragraph  1, and  may  be 
considered  to have  acted  improperly,  the  insurer  may 
claim  compensation  for  the  loss  which  he  has 
suffered. 
5. If  the  insurer  proves  that  the  policyholder's 
failure  to fulfil  the obligation  laid  down  in paragraph 
1 was  intended  to cause  him  loss  or to deceive  him, 
he shall  be released  from  all liability  to make  payment 
in respect  of the claim. 
Article  9 
1. If  a claim  arises,  the policyholder  shall  declare  it 
to the  insurer  in accordance  with  the  conditions  and 
time  limits  laid  down  in the policy. 
The time  limit  must  be reasonable.  Such  time  limit 
may  be fixed  by national  laws  for  certain  classes  of 
insurance. 
2. The  insurer  may  require  the  policyholder  to 
provide  all the  necessary  information  and  documents 
on the  circumstances  and  consequences  of the claim. 
No C 190/6 Official  Journal  of the  European  Communities 28. 7. 79 
3. If  the  policyholder  fails  to fulfil  the obligations 
referred  to in paragraphs  1 and  2, and  may  be 
considered  to have  acted  improperly,  the  insurer  shall 
be entitled  to claim  compensation  for  the  loss  he has 
suffered. 
4. If  the  insurer  proves  that  the  policyholder's 
failure  to fulfil  one  of the  obligations  laid  down  in 
paragraphs  1 and  2 was  intended  to cause  him  loss  or 
to deceive  him,  he shall  be released  from  all liability 
to make  payment  in respect  of the claim. 
Article  10 
1. The  circumstances  and  conditions  in which  the 
contract  may  be denounced  or terminated  shall  be set 
out in the  contract  either  directly  or by reference  to 
the law. 
2. The  contract  may  be terminated  without  notice 
only  where  one  of the  parties  has  failed  to fulfil  one 
of its obligations  with  the  intention  of deceiving  the 
other.  The  policyholder  may  also  be granted  a right 
under  national  law  to terminate  the  contract  without 
notice  in other  circumstances. 
3. Without  prejudice  to the  circumstances  referred 
to in paragraph  2: 
(a) premature  termination  on  the  part  of  the 
policyholder  or the  insurer  shall  not  take  effect 
until  a period  of 15 days  has  elapsed  from  the 
date  on which  notice  of termination  is given,  as 
the case  may  be,  to  the  insurer  or  to  the 
policyholder  at his last  known  address; 
(b) if provision  is made  in the  contract  for  automatic 
renewal,  such  renewal  shall  take  effect  in each 
case  for  a period  not  exceeding  one  year,  unless 
one of the  parties  gives  notice  of termination  at 
least  two  months  before  the date  of expiry  of the 
current  insurance  period; 
(c) if the  contract  is for a period  of more  than  three 
years,  the  policyholder  may  terminate  it at the 
end of the  third  year  or of any  subsequent  year 
by giving  at least  two  months'  notice; (d) as regards  sickness  insurance  and  contracts  drawn 
up on the  same  basis  as life  assurance  contracts, 
national  law  may,  by  way  of derogation  from 
subparagraphs  (a) and  (b),  limit  or prohibit  termi-
nation  of the contract  by the insurer. 
Article  11 
If the  insured  person  is not  the  policyholder,  he shall 
have  the  same  rights  against  the  insurer  as Article 
8 (2) grants  to the policyholder.  He shall  be treated  in 
the same  way  as the latter  for the purposes  of Articles 
3 (1),  4 (1),  8 (1) and  9 (1) and  (2)  as regards  the 
obligations  referred  to in those  Articles  where  he has 
knowledge  of the  contract  and  is able  to fulfil  such 
obligations. 
Article  12 
The parties  to the  contract  may  agree  on  more 
favourable  terms  for  the  policyholder,  insured  person 
or injured  third  party  than  are  provided  for  in this 
Directive. 
Article  13 
Member  States  shall  bring  into  force  the  measures 
necessary  to comply  with  this  Directive  within  18 
months  of  its  notification.  They  shall  forthwith 
inform  the Commission  thereof. 
Article  14 
After  notification  of this  Directive,  Member  States 
shall  ensure  that  the  Commission  is informed,  in 
sufficient  time  for  it to submit  its comments,  of any 
new laws,  regulations  or administrative  provisions 
which  they  intend  to adopt.  They  shall  also  inform 
the other  Member  States  thereof. 
Article  l') 
This  Directive  is addressed  to the Member  States.