Insurance Debts: Money Debts or Comparable-Value Debts?

Chambers B, C, and F of the National Court of Appeals in Commercial Matters decided respectively in re. “Gutierrez Daniel c/ Paraná S.A. De Seguros Sobre Ordinario”, “B. G. S. y otra c/ Allianz Argentina Compañía de Seguros S.A. s/ Ordinario”, and “F., H. E. c/ Sancor Cooperativa de Seguros Limitada s/ Ordinario” –all cases related to total loss or theft of insured vehicles– that if the insurer fails to meet the payments and incurs in default, it must fulfil its obligations by paying the sum insured that the same insurer is applying to similar vehicles at the time of payment. According to these chambers’ criterion, it would no longer be sufficient to pay the sum established in the policy plus interests. Rather, the insurer would have to pay the cover value it offers to vehicles similar to the one in the claim at the time of the payment.
 

To rule in this way, the judges understood that there is a striking economic difference between the sum insured established in the policy -even if adjusted considering interests- and the replacement value of a similar vehicle.

Although it is true that the three chambers recognized the importance of the sum insured as a legal concept governing the premium-risk relationship in the policy, they understand that its application is not automatic, and that each specific case must be considered, and its application must be analyzed. This is especially true in those situations where the insurer is in arrears.
 

According to these rulings, the delay in payment prevents the insured from replacing the insured property, since the value of the property increases in a way that sum insured would not cover its replacement, even with the interests. Allowing an insurer to discharge its payment obligation by paying the sum insured established in the policy would collide with the main function of an insurance, which is to maintain the insured's property unscathed to return things to the state prior to the loss.
 

In other words, the insurer must pay a value equivalent to that the insured would have received if the insurer had complied with its obligation in due time. Therefore, the original monetary obligation turns into an obligation of comparable value, where the sum owed by the insurer will depend on the value variation of the insured property to the date the insurer pays.
 

These precedents emphasize that allowing the insurer to comply with the obligation by paying the sum agreed to when the policy was taken out (plus interests) would imply an unlawful enrichment on the part of the insurer, since such sum with the corresponding interests would not cover the depreciation of the currency and the consequent increase in the price of vehicles.
 

It should be noted that these precedents take place in the context of a strong inflationary process that has been affecting the Argentinian economy for several years. It will be of the utmost importance to monitor the evolution of the other three chambers’ criteria, as well as the final criterion to be adopted by the Argentine Supreme Court of Justice.