All risk insurance – current position of the Polish Office of Competition and Consumer Protection and Potential Legal Consequences

Publication date: May 06, 2025

Property insurance in “all risks” formula is the product that offers broad protection against all unforeseen events, unless they are expressly excluded in the terms of the contract. Although such a policy provides broad protection, it also involves significant challenges for both consumers and entrepreneurs. In particular, it is important to ensure the transparency of the terms of the contract, as well as the consumer’s full consent to any changes to its content.

The position of the Polish Office of Competition and Consumer Protection in the context of “all risks” insurance

The Polish Office of Competition and Consumer Protection (UOKiK) is currently conducting explanatory proceedings aimed at protecting consumers against unfair market practices. Polish UOKiK, in addition to general verification of compliance with the law, pays special attention to these issues in the context of “all risks” insurance:

1. Changes to the terms of the contract without the consumer’s consent – It may happen that insurers introduce changes to the policy, such as an increase in the premium or extension of the scope of cover, treating it as an automatic change, which the consumer would be presumed to accept. According to the law, any change to the terms of the contract requires the express consent of the consumer, and the lack of it results in the invalidity of such a change.
2. Dishonest advice and “misselling” – The phenomenon of misseling, or the sale of insurance products that do not meet the real needs of consumers, is another problem. The Office of Competition and Consumer Protection emphasizes that insurance sellers must provide consumers with full information about the terms of the contract, including any exclusions and changes in the scope of protection, the amount of the premium, so that they can make an informed decision and obtain clear information about the policy.

Examples of conditions and exclusions in “all risks insurance”

What does all risk insurance cover?

Property insurance against all risks covers property owned by the Insured, property of third parties and employee property that is used in accordance with its intended purpose in connection with the business activity conducted by the Insured. The insurance sum is declared by the Insured and determined separately for different categories of property covered by the insurance. The Insurer under all risks insurance is responsible for incurred and documented costs related to saving property, preventing damage, cleaning up the remains of damage and restoring production or plant documentation, within the limits of the insurance sum and liability limits.

What is not covered by all risks insurance?

all risks insurance does not include buildings and structures designated for demolition, tents, marquees, kiosks without foundations, property under construction, reconstruction, modernization, and property of a historic, artistic, unique, collectible nature, works of art and antiques. The limitations of insurance coverage also apply to damage caused by the Insured’s wilful action or omission, warfare, sabotage, the action of nuclear energy, theft without signs of burglary or robbery, corrosion, natural wear and tear, and cracking, discoloration or falling off parts insured items, unless they result from a covered accidental event.

Legal basis regulating this type of insurance

The Office of Competition and Consumer Protection’s activities in the field of “all risks insurance” are based on several key provisions that aim to ensure the transparency of the insurance market and the protection of consumer interests. Provisions indirectly regulating this type of insurance can be found in the following acts of law:

• Act of 16 February 2007 on the protection of competition and consumers

According to Article 24, paragraph 1 of this Act, it is prohibited to use unfair market practices that may mislead consumers or violate their interests. In the case of “all risks” this may concern, for example, incomplete or unclear contract provisions that mislead the consumer as to the scope of protection.

• Act of 11 September 2015 on insurance and reinsurance activities

Article 25 section 1 of this Act imposes on insurers the obligation to provide the consumer with full and understandable information on the terms of the contract before its conclusion. This includes all details regarding the scope of protection, exclusions and possible changes in the premium, which may be of key importance for this type of insurance.

• Act of 23 April 1964 – Civil Code

In accordance with Article 385³ of the Civil Code, contractual clauses that have not been individually agreed with the consumer and are contrary to good practices or grossly violate the interests of the consumer may be considered unlawful. In such a situation, unlawful clauses may be considered invalid. The consumer may demand the invalidation of the contract or claims related to improper performance of the contract, which may involve the obligation to return overpaid contributions or change the terms of the contract.

• Directive 2009/138/EC of the European Parliament and of the Council

This directive regulates the rules of transparency and supervision of insurance activities in the European Union, imposing information obligations on insurers and providing consumers with better protection in the area of concluding contracts. Failure to comply with the rules of transparency and compliance with information requirements may lead to administrative sanctions at the national level, including penalties imposed by the Polish Financial Supervision Authority.

Potential consequences of unfair practices by insurance companies.

• Act of 16 February 2007 on the protection of competition and consumers

According to Article 106, paragraph 1 of this Act, the Office of Competition and Consumer Protection may impose a fine on an entrepreneur who uses unfair market practices. However, the amount of this fine depends on the harm caused to consumers and the “size” of the entrepreneur. In the case of market practices that violate the interests of consumers, the fine may amount to up to 10% of the entrepreneur’s annual turnover in the case of serious violations.

Summary

Insurance in the formula of “all risks” offers broad protection, but due to the need for transparency of the provisions, they also involve significant challenges related to the transparency of the terms of the contract and the full consent of the consumer to the changes. In the event of a breach of legal provisions, such as the lack of consumer consent to changes in the contract, unfair advice or the use of prohibited clauses, entrepreneurs may be punished with high fines – in the case of violations of competition and consumer protection regulations, the penalty may amount to up to 10% of the company’s annual turnover. In addition, entrepreneurs may be fined by the Polish Financial Supervision Authority with up to PLN 1 million for improper information practices or for violating the principles of transparency.

The Polish Office of Competition and Consumer Protection is responsible for ensuring that the activities of entrepreneurs, including those offering insurance, are conducted in accordance with the principles of fair competition. If insurance policies, including “all risks”, are used in a way that violates these principles (e.g. by manipulating claims, unfairly reducing prices or unjustified favoring of companies), the Office of Competition and Consumer Protection has the right to intervene and enforce antitrust regulations and counteract unfair competition on the market.

In turn, consumers have the right to invalidate a contract containing unfair terms and to pursue claims related to improper performance of the contract. All this underlines the importance of compliance with legal regulations in the insurance sector, including those related to “all risks” to ensure that consumers have adequate protection and that contract terms are transparent.