Sometimes, a fault can bring significant profit to the liable party. This profit is not always proportional to the compensation owed to the victim. The liable party must fully compensate the victim for the damage suffered, placing the victim in the position they would have been in if the fault had not occurred. This principle is now codified in Book 6 of the Civil Code.
Issue of Unfair Profit
It can happen that the liable party, even after paying compensation, still retains a large profit from their faulty actions. This feels unjust. Therefore, the legislator introduced a new rule: Article 6.31, §3 of the Civil Code. This rule states that if the liable party intentionally and with the aim of making a profit infringes on the personal rights or the honor and reputation of the victim, the judge can award an additional compensation. This compensation can equal the entire or part of the net profit made by the liable party.
Insurance Aspects
Article 6.31, §3 of the Civil Code has a deterrent effect. The insurance sector has therefore suggested that this additional compensation should not be insurable. However, the legislator has not specified that this compensation is uninsurable. This makes sense because only the consequences of uncertain, future events that are beyond the control of the insured are insurable.
The additional compensation is only owed if the infringement was intentional and aimed at making a profit. Insurers do not have to provide coverage for incidents that were intentionally caused. This means that a liability insurer can refuse coverage for the additional compensation resulting from an intentional infringement on personal rights, honor, or reputation of the victim.
Policy Conditions
Insurers can also consider such infringements as gross negligence. It is important that insurers clearly and specifically describe these infringements in the policy conditions. A general reference to Article 6.31, §3 of the Civil Code is not sufficient. In cases of gross negligence or intent, insurers can refuse coverage if they can prove a causal link between the insured’s fault and the incident.
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