Transparency in the Insurance Contract Law of Germany

Transparency constitutes a well-recognised element in contract law. However, with regard to insurance contract law, transparency is even more important and may not be overestimated. This is due to the fact that insurance is a so-called legal product. The legal initial situation is, therefore, evidently different compared to contracts for the exchange of goods. Characterised by sold goods, the latter can usually be seen, touched, felt or perceived by other means. Insurance contracts, however, do not entail dealings with ‘visible’ goods. Solely after the occurrence of an insured event, the insured risk materialises and becomes ‘visible’. Hence, insurance contracts are not characterised by an exchange of physical goods for money but by the exchange of a promise of performance for financial compensation. In the absence of any physical manifestation of a mere promise, a visual inspection is not possible at all—but this fact is not rendering the insurance product non-transparent per se.