Waiver of Gross Negligence Defence

Purpose

All three DACH jurisdictions give the insurer a statutory right to reduce or entirely refuse its benefit where the policyholder caused the insured event through gross negligence. The clause switches off this right contractually: for an additional premium, the insurer waives reliance on gross negligence, so the policyholder is fully indemnified as if the loss had been caused by ordinary negligence.

Effect and limits

The waiver typically covers gross negligence only, not intent or gross negligence by representatives, and is frequently capped by a sub-limit or an increased deductible. Alcohol or drug influence and certain expressly named breaches (such as flagrant security failures) are excluded from the buy-back in many wordings.

Negotiation and practice

The waiver is one of the most frequently negotiated extensions in commercial property insurance, since the line between ordinary and gross negligence is often disputed at claims stage. Insurers price the additional premium by claims history and risk quality; brokers typically also negotiate the list of carve-outs to make the buy-back as broad as possible.

Jurisdictional comparison

Switzerland provides for a reduction “in proportion to the degree of fault” under Art. 14(2) VVG, and Germany has followed the same sliding-scale model since the 2008 VVG reform under Section 81(2) VVG. Austria is stricter: Section 61 VersVG generally provides for complete loss of cover on gross negligence rather than a proportionate reduction, making the contractual waiver economically even more significant there than in Switzerland or Germany.