By judgment of September 29, 2026, the Civil Chamber of the Superior Tribunal of the Judicial District of Bogotá (the “Tribunal”) decided an appeal filed by a Vehicle Inspection Center (the “CDA”) against the judgment of the Delegate Office for Jurisdictional Functions of the Financial Superintendence of Colombia (the “SFC”), which released an insurer from the obligation to return to the CDA the premiums it paid for certain liability insurance policies taken out on behalf of the CDA’s customers.

Regulatory background

The mandatory insurance provided for in Law 2283 of 2023

• Paragraph 2 of article 6 of Law 2283 of 2023 required CDAs to purchase third-party (non-contractual) liability insurance.
• The insurance was meant to cover CDA users against property damage caused to third parties by vehicles that underwent the technical-mechanical inspection, at no cost to the users.
• The measure sought to reduce the insurance gap in the vehicle fleet and to increase the protection of road accident victims.

Judgment C-470 of 2023

• On November 8, 2023, the Constitutional Court (the “Court”) declared that provision unconstitutional in judgment C-470 of 2023, finding that the obligation restricted the CDAs’ freedom of enterprise and forced CDAs to assume a risk unrelated to their business and to cover damage caused by the driving of private vehicles.
• The declaration of unconstitutionality was pure and simple, without retroactive effects.
• The judgment was notified and published on April 3, 2024.

The case at hand

To comply with the obligation set out in Law 2283 of 2023, the CDA purchased 17,719 individual insurance policies from an insurer, one for each vehicle it inspected, and paid approximately COP 961 million in premiums. In each policy, the CDA was the policyholder and the insured was the owner of the inspected vehicle, and all policies were governed by the same general terms and conditions.

Clause 11 of the general terms and conditions provided that, since this was liability insurance in which the insured was different from the policyholder and the beneficiary was an injured third party, the insurance could not be revoked at the will of the parties.

On November 17, 2023, a few days after the Court’s decision was announced, the CDA notified the insurer of the unilateral revocation of all the policies, based on article 1071 of the Code of Commerce. It also published a notice in a newspaper to inform the insureds that the policies had been revoked. The insurer did not accept the revocation and did not return the premiums.

The CDA sued the insurer before the SFC and requested the reimbursement of the premiums paid or, alternatively, of the unearned premiums as from the revocation. It argued that it had purchased the policies only to comply with the law and that, as policyholder, it was entitled to revoke them unilaterally.

At first instance, the SFC dismissed the CDA’s claims. It held that these were statutory insurance policies, entered into in the CDA’s own name but on behalf of third parties, so the insurable interest belonged not to the CDA but to the insured owners. It added that judgment C-470 of 2023 had no retroactive effects and therefore did not invalidate the policies entered into before the decision.

On appeal, the CDA argued that, as policyholder, it was a party to the contract and could revoke it; that the irrevocability clause was abusive; that the policies lacked an insurable interest since the enactment of the law; and that the insurer had contradicted its own position on irrevocability by announcing that it would revoke the policies whose premiums had not been paid.

The Tribunal upheld the SFC’s judgment and ordered the CDA to pay costs, based on the following considerations:

1. Effects of the declaration of unconstitutionality on policies already in force

• The Tribunal noted that, as a general rule, constitutional judgments have effects going forward, unless the Court orders otherwise. When unconstitutionality is declared in a pure and simple manner, contracts entered into while the law was in force remain valid:

“It is clear, then, that judgments on the constitutionality of a legal provision produce, as a rule, effects going forward, unless the Constitutional Court itself deprives the provision it found contrary to the Constitution of its validity from its origin, or defers its effects into the future. But, in the first case, that is, when unconstitutionality is declared pure and simple, the acts and legal transactions entered into in accordance with the challenged law remain valid and produce the effects provided by law.” (Emphasis added).

• A constitutional judgment only produces effects once it is formally communicated; the Court’s press release was not enough. Therefore, when the CDA communicated the revocation to its customers on November 17, 2023, the policies were still mandatory and, consequently, irrevocable:

“(…) it is indisputable that the unilateral revocation submitted on November 17, 2023 by [the CDA] to the defendant insurer could not produce effects because, at that time, the decision of unconstitutionality had not been formally communicated, so that the liability insurance policies purchased by that CDA to comply with Law 2283 of 2023 (art. 6, par. 2) were still mandatory and, for that very reason, irrevocable.” (Emphasis added).

2. The policyholder may revoke the insurance, but not when it purchases insurance on behalf of others

• The Tribunal acknowledged that unilateral termination is an expression of private autonomy that must be made in writing, is unilateral, must be addressed to the other party and only has effects going forward.
• However, it clarified that this right is limited when the policyholder and the insured are different persons, because the policyholder bears the obligations under the contract, while the right to the insurance benefit belongs to the insured:

“It is therefore true, as the appellant company argues, that the policyholder, as a contracting party, may unilaterally revoke the insurance contract. There is no doubt about that. But the matter is not as simple as suggested, because the policyholder may have acted on behalf of another, or the insurance may be mandatory. (…) In other words, the revocation of the insurance has special features when the capacities of policyholder and insured do not coincide, since the former, although a contracting party, did not act in its own name but on behalf of another, while it is the latter who holds the insurable interest.” (Emphasis added).

• The Tribunal noted that some types of insurance do not allow unilateral revocation. In some cases, the exception is established by law and, in others, it arises from the nature of the insurance, as is the case with surety bonds between private parties:

“The exceptions [to unilateral revocation] are established by law, as, for example, in transport and life insurance, or in surety bonds for state contracts. Meanwhile, the limit on that general rule of unilateral termination, in the case of surety bonds between private parties, arises from the nature of that coverage, as recognized by case law and legal scholarship.

[…]

Indeed, it is agreed that it is the very nature of the surety bond that prevents either party from ending it at its whim, and both the insurer and the policyholder must be equally subject to this. There are no serious reasons to draw distinctions and provide unequal treatment. If it has been common practice for the debtor to pay the premium, and even for the debtor itself to take out the insurance, it would be unjust to allow the insured to be at the mercy of the capricious and even malicious conduct of that policyholder. It would be odious to endorse the idea that the guarantee depends on whether he ‘wants’ it or ‘sees fit’.” (Emphasis in the original).

• Based on the above, the Tribunal extended that reasoning to the liability insurance imposed by Law 2283 of 2023. Allowing the policyholder to terminate it at will would leave without coverage the vehicle owners whom the legislature sought to protect:

“This understanding of the matter can be transposed, mutatis mutandis, to the liability insurance imposed by Law 2283 of 2023, because allowing termination at the will or discretion of the policyholder that acted on behalf of the insured owner would deprive of coverage the very person the legislature sought to protect through that insurance.” (Emphasis added).

• Consequently, while the provision was in force, these policies by their nature excluded the unilateral revocation provided for in article 1071 of the Code of Commerce:

“Therefore, if the insurance contracts entered into under the rule set out in paragraph 2 of article 6 of Law 2283 of 2023 were imposed on the CDAs to protect third-party owners of vehicles and motorcycles, it is clear that, by their nature, they exclude the unilateral revocation provided for in article 1071 of the commercial code, since allowing it, while the provision was in force, would deprive those insured owners of coverage and frustrate the protective purpose that the legislature had at the time (…).” (Emphasis added).

3. The insurable interest may belong to an insured other than the policyholder

• The Tribunal rejected the argument that the policies lacked an insurable interest. It explained that the policyholder may have no insurable interest and the insurance may still exist, because that interest belongs to another person. In this case, it was the vehicle owner, whose assets could be affected.
• Relying on legal scholarship, it clarified that the policyholder may contract in its own name but on behalf of the insured (so-called “insurance on behalf of others”). Precisely for that reason, the CDA could not revoke the policies:

“Therefore, the policies in question did have an insured with an insurable interest, and it is precisely because that interest belonged to a person other than the policyholder that the latter could not unilaterally revoke the insurance.” (Emphasis added).

4. Validity of the irrevocability clause in liability insurance

• In insurance matters, what the parties agree in the contract prevails. The provisions of the Code of Commerce only supplement the will of the parties. Therefore, if clause 11 of the general terms and conditions excluded revocation at the will of the parties, the policies could not be revoked.
• The irrevocability clause was not abusive, even after the liability insurance ceased to be mandatory, since such policies are intended to protect the insured and the victim:

“Of course, that contractual provision, even after the insurance ceased to be mandatory following the Court’s ruling, cannot be labeled abusive because it does not favor “excessively or disproportionately the contractual position of the drafting party” nor does it “unfairly and harmfully prejudice that of the adhering party”. On the contrary, it further protects the insured, and even more so the beneficiary, which is why the commercial code tolerates that stipulation, and it is reasonable in liability insurance, whose very purpose is to compensate the victim (C. Co., arts. 1162 and 1127).” (Emphasis added).

5. Automatic termination for late payment of the premium is not a revocation

• The Tribunal analyzed the insurer’s alleged contradiction. The insurer had defended the irrevocability of the policies, but had also warned the CDA that, if it did not pay the outstanding premiums, it would revoke the policies, citing article 1071 of the Code of Commerce.
• For the Tribunal, the contradiction was only apparent: although the communication referred to article 1071, it clearly concerned the late payment of the premium, the consequence of which is the automatic termination of the insurance (article 1068 of the Code of Commerce).
• Relying on the case law of the Supreme Court of Justice, it distinguished between the two concepts: termination for late payment operates by operation of law, whereas revocation is an act of will that must be made in writing and communicated to the other party:

“While the first of these concepts operates ipso iure, by the mere default of the policyholder in paying the premium and, consequently, does not require, as already stated, any statement by the insurer, much less notice to the policyholder, the second, by contrast, is in essence an act of will of the party that chooses that option, which requires written form and notice to the other contracting party in order to produce legal effects.” (Emphasis added).