Proportionality in the New German Insurance Contract Act 2008

Abstract

In 2008, the German legislature enacted a completely revised Insurance Contract Act, in which a new rule of proportionality replaced the former all-or-nothing principle for questions of liability. This article outlines the reasons for this shift and the impact of the rule of proportionality on insurers and policyholders. It also addresses the criticisms raised regarding the new system as well as some of the technical problems arising in its application, for example, with regard to placement of the burden of proof. This is followed by a short discussion of the rule as it is traditionally applied in Switzerland and as it is adopted in the Principles of European Insurance Contract Law (PEICL).