In a recent 2025 ruling, the Council of State (hereinafter, the “CE”) decided a medical liability case initiated through a direct reparation action filed by the parents of a newborn against a hospital entity. The latter was both the policyholder and the insured under a professional liability insurance policy issued on a claims-made basis.
The proceedings originated from the damage suffered by the newborn because of a medical maneuver performed during delivery. The Regional Disability Rating Board determined a 76% loss of earning capacity for the child.
The court of first instance declared the hospital liable in tort and ordered the payment of moral damages, health damage, and loss of income. Moreover, it found that the parents’ claim against the hospital had been submitted outside the policy period and disapplied the claims-made clause, considering it abusive on the grounds that it unduly limited the scope of coverage.
Under this claims-made coverage scheme, the clause provided protection only for losses first claimed by the victim against the insured during the policy period, regardless of when the act giving rise to the insured’s liability occurred.
However, upon deciding the appeal, the CE modified the lower court’s decision, clarifying that claims-made clauses are valid under Colombian law, provided they comply with the limitations and conditions established by statute.
- Applicable legal freamework
The CE recalled that Article 4 of Law 389 of 1997 expressly authorizes the claims-made modality in civil liability insurance, under which coverage is limited to claims made against the insured or the insurer during the policy period. Likewise, it noted that Law 1328 of 2009, which governs financial consumer protection, establishes the criteria to identify abusive clauses, including those that disturb the contractual balance or involve an abuse of dominant position.
- Jurisprudence around claims made clauses
The CE reiterated its prior jurisprudence recognizing the validity of liability insurance policies issued on a claims-made basis, holding that under this type of policy, the insurer covers only those loss events for which the victim submits a claim to the insured during the policy period, even if the act giving rise to the insured’s liability occurred before the policy’s inception.
Similarly, the CE recalled that the Supreme Court of Justice has also upheld this type of insurance.
- Standard for determining whether a clause is abusive
The CE further clarified that a clause may be deemed abusive only if it falls within the circumstances contemplated in Article 11 of Law 1328 of 2009 or within the list of abusive clauses established by the Financial Superintendence of Colombia in its Basic Legal Circular.
Furthermore, the Court emphasized that there must be concrete evidence showing that the clause alters the contractual balance or entails an abuse of dominant position by the supervised entity. In this case, the CE found that the trial judge had not conducted such an analysis and, therefore, it was not appropriate to declare the claims-made clause abusive.
- Conclusion
The CE modified the first-instance decision, concluding that the claim had been submitted outside the policy coverage period. Accordingly, it found the lack of coverage proven and reversed the judgment against the insurer. Nevertheless, it upheld the judgment against the hospital.