Article: O.-J. Luik, R. Ratnik, M. Braun, "Aggravation of Risk and Precautionary Measures in Non-Life Insurance: A Tricky Scope for the Insurer?", Baltic Journal of Law & Politics 2015 (8) 2, pp. 1–45. DOI: 10.1515/bjlp-2015-0017 (published online 29 February 2016)
Date note: the date of this post (29 February 2016) is the date of the original publication. This introduction was written for this website in 2026.
Co-authors: Rainer Ratnik and Magnus Braun.
Research question
Where is the line between a policyholder increasing the insured risk and failing to comply with precautionary measures? Both may justify reducing or refusing payment, but the insurer's remedies differ depending on which category applies.
Main conclusions
The same act may fall within both categories, which makes them hard to separate. The article compares Estonian, Latvian and Lithuanian law and measures them against PEICL, with German, Finnish and another neighbouring jurisdiction as further comparators. The Baltic states regulate these matters differently, and using PEICL would change the content of policyholder duties. The uncertainty is a risk for insurers, and the applicable law can materially affect the outcome of a claim.
Relevance for insurers
In Estonia, increase of risk is governed by Law of Obligations Act (võlaõigusseadus, VÕS) § 445 et seq., while breach of safety requirements falls under § 452(2). Correct classification determines which notification and termination rules apply and whether payment can be reduced proportionally. In multinational programmes the governing law of the local policy deserves attention.