The story is familiar: in spring, water came into the top-floor flat, the insurer paid and the flat was repainted – but the roof was not repaired. In autumn, water came in at the same spot, in the same way, and this time the insurer rejects the claim because “the cause of the previous loss was not eliminated”. The resident blames the representative, the representative blames the contractor, and the building asks me: is this justified? The answer depends on what the Civil Code says, what the policy conditions say, and what the building can prove. This article puts these three side by side.
- Under Section 6:463 of the Hungarian Civil Code (Ptk.), the policyholder and the insured must act as can generally be expected in the given situation to prevent loss – failing to carry out repairs after the first loss affects this obligation.
- Policy conditions take one of two approaches: some treat a repeated loss as gross negligence – i.e. grounds for exemption of the insurer – where a written warning was given, while others exclude it if the earlier defect was not repaired by a professional or if it recurs within one year of the repair.
- According to the Curia, breaching a rule is not in itself enough for the insurer to be released from paying: the gross negligence must relate to the occurrence of the loss, and the insurer bears the burden of proof – an exclusion in the conditions, however, is part of the contract that the building signed.
What the law says: loss prevention and exemption of the insurer
Under Section 6:463(1) of the Hungarian Civil Code (Ptk.), the policyholder and the insured must act as can generally be expected in the given situation to prevent loss; under Section 6:464(1), the insurer is released from paying if it proves that the loss was caused unlawfully, by intentional or grossly negligent conduct of the policyholder or the insured – and under paragraph (2) this also applies to a breach of the loss-prevention obligation. This is the rule on exemption of the insurer: the insurer invokes it, and the insurer bears the burden of proof.
Exclusion is a separate category: for anything that the conditions do not treat as an insured event in the first place, no negligence has to be proved – it is enough for the facts to fit the wording. Mixing up the two concepts is the source of most disputes, so it is worth checking in the wording of the conditions which clause the rejection relies on – the crash course in reading policy conditions helps with this.
What the conditions say: two Hungarian examples
One Hungarian condominium policy wording defines, under the exemption rules, that conduct is grossly negligent among other things if the loss occurred under the same circumstances as an earlier loss because the measures needed to prevent loss were not taken, even though the authority or the insurer had given a written warning. So three elements are required here: the same circumstances, measures not taken, and a written warning – if the insurer only said orally during the inspection that “the roof should be repaired”, the exemption is open to challenge.
Another Hungarian wording phrases it as an exclusion: if the loss occurred at the same place as a result of a recurring defect in the roof insulation, wall insulation or roof covering, the insurer pays only if the defect that caused the earlier loss was repaired by a professional and the new failure occurred more than one year after the documented date of the repair. Here no negligence has to be proved; the building, however, must be able to prove the professional repair and its date – with an invoice and a work sheet. Which approach each insurer uses, and for which types of loss, varies, so the conditions of your own policy are decisive.
When is it justified, and when can it be challenged?
A rejection is typically well founded if the second loss really arose from the same cause, at the same place, under unchanged circumstances, and the building did nothing despite a written request from the insurer or the authority, or if a clear exclusion in the conditions – no professional repair, recurrence within one year – fits the facts. In that case it is not the insurer who is responsible towards the resident either: maintaining the commonly owned roof is the building's job, and under Section 43(1) of the Condominium Act (Tht.) the common representative (the building's elected manager) must take all necessary measures for the maintenance of the building – the resident's loss is then a liability question between the building and the resident, separate from the insurance payment.
A rejection can, however, be challenged if the second loss has a different cause – the first was a burst pipe, the second water ingress after a storm; if the repair was carried out but simply did not prove durable – the loss-prevention obligation requires the conduct that can be expected, not a result; if the “warning” was not in writing even though the conditions require it; or if the insurer invokes exemption but shows only a breach of a rule. On the last point, decision no. Jpe.I.60.003/2023/16 of the Curia (Kúria, Hungary's supreme court), which has binding legal-uniformity effect, gives a mandatory interpretation: for the insurer to be released from paying, the intent or gross negligence must relate not to the underlying breach of a rule but to the insured event – the occurrence of the loss – and gross negligence is such a conspicuous neglect of care that it comes close to intent. A postponed roof repair may be like this, but not automatically.
How to pursue a dispute: reasons, complaint, arbitration
The first step is written reasons: ask the insurer to state precisely which clause of the conditions it relies on. This shows whether it is a matter of exemption or exclusion, and who has to prove what. The second step is counter-evidence: the repair invoice and work sheet, the contractor's statement, photographs and dates of both losses, an expert opinion on the cause. The third step is a complaint to the insurer; if that is unsuccessful, an owner who is a private individual may turn to the Financial Arbitration Board (PBT), and the building as a community to the courts – the MNB (Hungary's central bank and financial supervisor) does not decide individual claims disputes. The stages of claims settlement are described in the article on loss assessment and settlement agreements.
As a broker, if a case gets stuck or is disputed, I help the building where I can. I act on the client's behalf (as their agent, not the insurer's) and do not provide legal representation – court proceedings are a matter for a lawyer.
The lesson for the building: preventing the second loss starts after the first
After the first leak, the most important document is not the insurer's transfer but the invoice for the roof repair. Professional, date, description – these three details are the building's most important argument at the next loss. If the insurer sends a written request for repairs after the inspection, it should go into the building's insurance file, and the representative should report at the next general meeting on what has been done about it. The loss-prevention checklist covers the roof and the risers item by item, and the article on claims history shows that a repeated, unrepaired loss also comes back to the building at the next request for quotes.
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Sources
- Hungarian Civil Code (Ptk., Act V of 2013) – National Legislation Database (Nemzeti Jogszabálytár)
- Curia (Kúria) decision no. Jpe.I.60.003/2023/16 with binding legal-uniformity effect (exemption of the insurer, gross negligence)
- Colonnade ATLASZ Társasház Biztosítás (condominium insurance) – policy conditions and customer information (2023)
- Generali Házőrző policy conditions for multi-unit residential buildings (Nysz. 23521, 2022)
- Generali claims settlement information (quoting Hungarian Civil Code (Ptk.) Sections 6:460–6:471)
- MNB (Hungarian central bank / supervisor) – Financial Arbitration Board (PBT)
- Condominium Act (Tht., Act CXXXIII of 2003 on condominiums) – National Legislation Database (Nemzeti Jogszabálytár)
