THE ESSENTIALS
Before you start
- Both parties using the same insurer is a situation addressed by Portuguese law.
- The insurer must disclose the conflict to those concerned.
- Choice of defence and responsibility for its costs are not unlimited funding.
The duty to disclose the conflict
Article 140(4) of Portugal’s insurance contract regime requires the insurer to disclose the situation to the interested parties when the insured and the injured party have policies with that insurer, or another conflict of interests exists.
This does not automatically invalidate the policy or decide liability for compensation. The initial questions are how the conflict was identified and what information was given. Publicly sharing the claimant’s documents is unnecessary for requesting that explanation.
Choosing a defence involves conditions and costs
In the conflict situation described by the law, if an agreed settlement cannot be reached, paragraph 5 allows the insured to entrust their defence to a person of their choice. Unless otherwise agreed, the provision describes the insurer’s responsibility for costs as proportionate to the difference between its proposed amount and the amount obtained by the insured.
Do not assume that any legal fees you choose will be reimbursed in full. Ask for a written explanation addressing this rule, any existing settlement proposal, the contract and the treatment of expenses. Legal expenses insurance also has its own rules; mentioning lawyers in both arrangements does not make them interchangeable.
Nuno’s notebook: four documents, without an admission
Nuno collects the claim, policy, conflict disclosure and proposal received. Clara helps him distinguish an observed fact from a conclusion still in dispute. For a small café, uncertainty over legal fees matters to the budget; clarifying responsibility for costs should come before an impulsive promise to pay.
Article 140(6) and (7) address cooperation with the insurer and the consequences of acknowledging the claimant’s right or paying compensation without the insurer’s consent. Providing information does not require inventing an admission of liability. A notice carrying a deadline needs timely attention, with appropriate legal assistance where necessary.
What to do
1. Request a written explanation of the identified conflict and keep that communication.
2. Find the policy, claim and any settlement proposal, keeping them as separate documents.
3. Clarify defence arrangements and legal fees before assuming an expense will be reimbursed.
4. Forward notices through the policy’s process without missing deadlines. To compare future liability protection, request a quote reflecting the business’s actual activities.
KEEP THESE QUESTIONS
Your checklist for the next conversation
- Conflict disclosure retained.
- Claim and settlement proposal kept separate.
- Defence arrangements and allocation of costs clarified.
- Deadlines and policy contact route identified.
FROM THE ARTICLE TO YOUR SITUATION
Let us discuss your situation
Tell us what you want to protect. We review your request and help compare relevant terms. Requesting a quotation does not activate insurance.
Sources and transparency
Content updated on .
Consultation dates are stated in individual references when available.
Numerical examples are fictional and explain concepts. Editorial interpretations are identified in the text.
Information from RMACHADO GROUP. This is not an insurance offer or individual advice. Covers, acceptance, exclusions, sums insured and costs depend on the policy. The intermediary does not underwrite the risks.