Right of Withdrawal (Widerrufsrecht)
The right of withdrawal allows a policyholder to cancel a newly concluded insurance contract retroactively within a statutory period, without giving reasons.
Concept
The right of withdrawal allows a policyholder to withdraw from a newly concluded insurance contract within a statutorily defined period, without giving reasons, thereby retroactively dissolving the contract. It serves to protect the policyholder, who is meant to be granted a reasonable period for reflection after conclusion of the contract in order to reconsider the decision made.
Commencement and Duration of the Period
The withdrawal period generally only begins to run once the policyholder has fully received the policy document, the contract terms, and proper notice of the right of withdrawal; if the policyholder is not informed, or is incorrectly informed, of their right of withdrawal, the period can be significantly extended, or in certain jurisdictions the right of withdrawal can continue indefinitely.
Legal Consequences of Withdrawal
If the policyholder exercises the right of withdrawal within the applicable period, the contract lapses retroactively, and premiums already paid must generally be refunded; for the period between the start of the contract and the withdrawal, the insurer may, depending on the jurisdiction, retain a pro rata premium claim for the cover already provided, provided the policyholder was properly informed of this legal consequence.