Termination (Kündigung)

Concept

Termination is the unilateral declaration, requiring receipt by the other party, by which a contracting party ends the insurance contract for the future. It must be clearly distinguished from other grounds for ending a contract, such as rescission (which unwinds the contract retroactively) or withdrawal (a consumer protection instrument available within a statutory withdrawal period).

Ordinary and Extraordinary Termination

Ordinary termination occurs on notice at the end of the agreed contract term and is typically available to both the policyholder and the insurer. Extraordinary termination requires a specific triggering event defined by statute or contract, such as a premium increase, the occurrence of an insured event, or an increase in risk, and can generally also be declared during the current contract period.

Relevance for the Insurer

While the policyholder generally has extensive termination rights in mass-market business, the insurer’s right of termination is subject to stricter statutory limits in many lines and jurisdictions, in order to protect the policyholder from a sudden loss of coverage; in certain lines, such as private health insurance, the insurer’s ordinary right of termination is even entirely excluded.