Constitutional concerns regarding the one-year limitation period for legal action in insurance law
In its decision of October 22, 2025 (7 Ob 110/25i), the Supreme Court (OGH) set the course for a possible reform of the time limits for filing claims in insurance contract law. Specifically, the OGH has constitutional concerns regarding the one-year preclusive period stipulated in Section 12 Paragraph 3 of the Insurance Contract Act (VersVG), according to which insurance claims must be asserted in court promptly, i.e., within one year, after a qualified denial of coverage – otherwise, the insurer is permanently released from its obligation to pay. The OGH is requesting the Constitutional Court (VfGH) to repeal the entirety of Section 12 Paragraph 3 of the Insurance Contract Act (VersVG) on the grounds of a violation of the principle of equality. Such a decision would have significant practical implications for both policyholders and insurers.
The plaintiff had taken out a fire insurance policy for his house with the defendant insurance company in August 2021. A fire broke out in December 2021, and the restoration costs amounted to more than EUR 230,000. After the damage was reported, the insurance company commissioned an expert who determined contributory negligence on the part of the chimney sweep and the plaintiff himself. The insurance company rejected the claim for coverage by email dated July 6, 2022, expressly referring to Section 12 Paragraph 3 of the Austrian Insurance Contract Act (VersVG) and the legal consequences of missing the deadline.
The plaintiff filed his claim for payment of EUR 333,748.56 plus interest with the competent court only on December 19, 2024. The insurance company invoked the preclusion of the claim: the one-year period for bringing legal action had expired.
The court of first instance dismissed the claim, and the Higher Regional Court of Vienna (as the court of appeal) upheld this decision: The qualified rejection was formally valid, and its substantive correctness was irrelevant. The claim had lapsed pursuant to Section 12 Paragraph 3 of the Insurance Contract Act.
In the appeal proceedings, the Supreme Court (OGH) first establishes that Section 12 Paragraph 3 of the Insurance Contract Act (VersVG) is decisive for the outcome: Without this provision, the plaintiff's claim would not be precluded, but rather subject to the three-year statute of limitations under Section 12 Paragraph 1 VersVG. On the merits, the Supreme Court raises fundamental constitutional concerns: Only the insurer is granted the power by Section 12 Paragraph 3 VersVG to initiate a short preclusive period of one year by unilaterally refusing coverage, the expiry of which leads to the complete loss of the claim. No other debtor in civil law can control the limitation period for their creditor's claim in this way. The preclusive period applies exclusively to claims of the policyholder against the insurer, but not conversely to claims of the insurer (e.g., for premiums). It thus works to the detriment of the typically weaker party – contrary to the systematic approach of many other preclusive periods, which either treat both parties equally or are designed to benefit the weaker party. While the Supreme Court acknowledges the insurer's interest in the swift resolution of doubtful cases, in financial planning certainty, and in avoiding difficulties of proof, these objectives are already largely achieved through disclosure obligations and the three-year statute of limitations. The Supreme Court finds it unconvincing why an insurer should require such stringent additional protection compared to other businesses. For years, the prevailing legal scholars have criticized Section 12 Paragraph 3 of the Insurance Contract Act (VersVG) as a "poisonous fang" of insurance contract law. In Germany, the comparable provision of Section 12 Paragraph 3 of the former Insurance Contract Act (VVG aF) was repealed without replacement during the 2008 VVG reform because it unfairly disadvantaged the policyholder.
The decision is part of the increased constitutional review of special limitation and preclusive periods under civil law, particularly where economically powerful actors (insurers, banks, casinos) are privileged over consumers or typically weaker contractual partners.
The Supreme Court (OGH) is therefore requesting the Constitutional Court (VfGH) to declare Section 12 Paragraph 3 of the Insurance Contract Act (VersVG) in its current version entirely unconstitutional. The appeal proceedings are suspended pending the Constitutional Court's decision. Should the Constitutional Court share the Supreme Court's concerns, it could overturn this provision, thereby mitigating a fundamental aspect of insurance contract law. If the Constitutional Court follows the Supreme Court's recommendation, the extremely strict preclusion mechanism would be eliminated. Insurance claims would then—like other contractual claims—generally only be subject to a three-year statute of limitations. This would significantly strengthen the legal position of policyholders and represent a structural shift in litigation risk for insurers.
Supreme Court decision of 22.10.2025 (7 Ob 110/25i)
04.11.2025