Plain, Intelligible Language Necessary For Insurance Contracts

The ECJ, in the case of Jean-Claude Van Hove v CNP Assurances SA, confirmed that insurers must make sure their consumer customers understand the economic consequences of the insurance policies they take out.

To achieve this, the ECJ states that the terms relating to the main subject-matter of an insurance contract must be drafted in "plain, intelligible language" to comply with Article 4(2) of the Unfair Terms in Consumer Contracts (93/13/EEC) (the 'Directive').  The Directive provides that consumers are not bound by unfair clauses that are set out in contracts with sellers/ suppliers. Article 4(2) states that terms associated with the main subject-matter of the contract fall outside the scope of the Directive if they are drafted in plain, intelligible language.