By means of judgment SC236 of May 22, 2026, the Civil and Agrarian Cassation Chamber of the Supreme Court of Justice (“SCJ”) resolved a cassation appeal filed by the insured and beneficiary of a performance bond (in the form of insurance) against the judgment rendered by the Civil Chamber of the Superior Court of the Judicial District of Bogotá (the “Court”), within the declaratory proceedings initiated by the appellant against the insurer that issued the policy.

The case arises in the context of the performance of a construction contract for the building of a highway bridge, in connection with which a performance bond was obtained to cover damages arising from the breach of the obligations assumed by the contractor.

The insurance policy included a warranty clause that prohibited the introduction of modifications to the insured contract without prior notification to the insurer, the obtainment of its consent, and the issuance of the corresponding modification certificate.

During the performance of the construction contract, the parties thereto executed several amendments modifying deadlines and schedules:

• First amendment: the insurer was notified and provided coverage without issuing the modification certificate required by the warranty.
• Second amendment: the insurer was notified and provided coverage, notwithstanding that the notification was untimely.
• Third amendment: (which extended the execution deadline for the works): the insurance broker was notified after its execution, and the broker, in turn, forwarded it to the insurer belatedly. The insurer did not expressly communicate its acceptance.

Following the collapse of the bridge that was the subject of the works, the insured filed a claim with the insurer, which denied it alleging, among other grounds, the breach of the warranty clause regarding the notification of contractual modifications.

Consequently, the beneficiary filed suit against the insurer seeking a declaration of the occurrence of the insured event and the corresponding indemnification. However, both the trial court and the Court denied the claims.

The Court concluded that the mere breach of the warranty was sufficient to exempt the insurer from its indemnification obligation, without it being necessary to evaluate the insurer’s conduct or the formal termination of the insurance contract.

Based on the foregoing, we highlight the most significant considerations set forth by the SCJ in resolving the cassation appeal:

1. Nature of the performance bond (in the form of insurance)

The SCJ recalled that a performance bond (insurance) between private parties is a type of indemnity insurance with a compensatory nature.

It noted that the insurable risk consists of the debtor’s breach of its contractual obligations, capable of causing pecuniary loss to the creditor, and that coverage requires demonstrating the imputability of the conduct to the debtor, the existence of damages, the causal nexus, and that the loss is covered under the insurance policy:

“[T]he performance bond between private parties is a type of indemnity insurance and has a compensatory nature, since its primary purpose is to indemnify the insured or beneficiary against the breach of one or several obligations (to give, to do, or to refrain from doing) borne by the debtor arising from a contract and covered by a policy”.

2. Concept and classification of warranties in the insurance contract

The SCJ recalled that warranties are rules of conduct for the policyholder or the insured aimed at preventing the objective aggravation of risk, and distinguished two types: (i) promissory warranties, which consist of a future undertaking to do or refrain from doing something during the term of the insurance, and (ii) affirmative warranties, which are declarations concerning a determinative fact at the time the contract is entered into.

The SCJ specified that, in both cases, the warranty must be in writing, must reflect the unequivocal intent to grant it, and must bear a relationship with the insured risk:

“Warranties are, ultimately, rules of conduct for the policyholder or the insured whose primary purpose is to prevent the objective aggravation of risk. They do not seek to eliminate the peril; rather, they draw from it, comprehend it, and accept it, taking into consideration the measures necessary to ensure it remains the same over time, mitigating possible harmful consequences”.

Additionally, the SCJ emphasized that it is indispensable for the warranty to have a connection with the contingency that is the subject of coverage, such that its breach significantly increases the probability of the occurrence of the insured event.

3. Differentiated effects of warranty breache

The SCJ recalled that the effects of a breach vary depending on the type of warranty.

In the case of an affirmative warranty (contemporaneous with the execution of the insurance contract), its breach gives rise to the relative nullity of the insurance.

Conversely, in the case of a promissory warranty (relating to a subsequent fact), its breach entitles the insurer to terminate the insurance contract from the moment of the breach, with retroactive effect.

The SCJ explained:

“[T]he effects of non-compliance with the warranty differ between the affirmative and the promissory warranty. In the first case (...) it gives rise to the relative nullity thereof (...). In the case of the promissory warranty, the consequence is different: because it is a future promise to «do or refrain from doing a certain thing or to fulfill a certain requirement» its non-observance may entitle the termination of the insurance, as from the moment of its breach”.

4. Termination of the contract does not operate automatically

This was one of the central points of the judgment. The SCJ specified that, upon breach of a promissory warranty, the termination of the insurance contract does not operate by operation of law or automatically but rather requires an express and coherent manifestation of the insurer’s intent.

The SCJ reiterated the criterion established in judgment SC232-2023, to the effect that the termination of the insurance contract in these cases has retroactive effect and does not operate automatically:

“Commercial law allows the insurer to terminate the contract due to breach of a promissory warranty, and that power is intended to have ex tunc effects, immediately after the non-observance has occurred (...). However, it is pertinent to reiterate that termination does not operate automatically, but rather by decision of the insurer” (Emphasis added).

Accordingly, the insurer must actively exercise the power to terminate the insurance contract, and the mere breach of the warranty does not automatically release the insurer from its contractual obligations.

5. Good faith and the doctrine of estoppel as limits to the power of termination

The SCJ held that the insurer’s conduct subsequent to its knowledge of the warranty breach is legally relevant and constitutes a limit on the exercise of the power of termination.

When the insurer becomes aware of the breach and, notwithstanding, undertakes acts that reasonably lead the insured to understand that the contract remains in force, the insurer is bound by such conduct:

“[W]hen the insurer becomes aware of the breach of a promissory warranty and, notwithstanding, undertakes acts that reasonably lead the insured to understand that the contract continues to produce effects, the insurer is bound by such conduct. In such events, it is not legally acceptable for the insurer to subsequently invoke the non-observance as a basis for disregarding its own actions or for evading the contractual consequences arising therefrom”. (Emphasis added)

Likewise, citing judgment SC232-2023, the SCJ reaffirmed that consistency and the legitimate expectations generated thereby are restrictions on the valid exercise of termination:

“[I]t does not appear consistent with the good faith that may be demanded of every merchant –and, in particular, of the parties to an insurance contract– that the appellant should attempt to depart from the unequivocal meaning of its past acts, in order to exercise by surprise a power of termination that is by no means coherent with its prior actions”.

6. Justifiability of warranty breaches

The SCJ also recalled the grounds that may excuse the non-observance of a warranty pursuant to Article 1062 of the Commercial Code: (i) a change of circumstances causing the warranty to no longer be applicable to the contract, or (ii) that compliance would entail the violation of a subsequent law.

Furthermore, it noted that force majeure and fortuitous events, although not expressly contemplated in the statute, also constitute events that would justify excusing the non-observance of the warranty.

7. The role of the loss adjuster does not cure the warranty breach

The SCJ endorsed the Court’s finding that the appointment of a loss adjuster by the insurer does not cure the warranty breach nor imply a waiver of defenses or objections. The function of the loss adjuster is limited to verifying the circumstances of the insured event, without it being possible to infer therefrom that the insurer relinquished its contractual defenses:

“[T]he appointment of a loss adjuster is an irrelevant fact vis-à-vis the breach of the warranty clause, given that such course of action does not cure the breach, since the adjuster’s function is limited to ‘ascertaining and reporting (...) the nature, cause, effects, or quantum of the loss (...) without it being possible to infer, in any manner, that the insurer waived protests, objections, or defenses linked to the observance of obligations arising from the insurance contract” (Emphasis added).

8. Decision:

The SCJ resolved not to set aside the Court’s judgment.

In the SCJ’s view, determining whether the insurer’s tolerance of prior contractual modifications or the appointment of a loss adjuster constituted true acts of estoppel excusing the warranty breach was a matter that exceeded the scope of the direct ground for cassation invoked by the appellant.

In its opinion, this analysis would have required a review of the evidentiary assessment, which is a matter proper to the indirect ground (subsection 2 of Article 336 of the General Code of Procedure), which was not raised.