Court of Cassation, Civ. II, 4 July 2019, n°18-18444
On July 4, the 2nd Civil Chamber of the Court of Cassation examined the more than classic issue in insurance law, namely the legal effects of the late declaration of the claim by the insured.
Article 113-2, 4°, of the insurance code makes the insured person responsible for declaring to his insurer any circumstance likely to constitute a claim within the meaning of the insurance contract, and this, within a period provided for in the contract which may not be less than 5 days.
This legal requirement makes sense insofar as it is the insurer who will ultimately bear the financial burden of the claim.
As a reminder, forfeiture is a penalty that strikes the insured for non-compliance with the obligations placed on him AFTER the loss, unlike an exclusion which is, quite simply, a “hole” in the coverage regardless of the behavior of the insured.
Forfeiture for late declaration of the claim is not an automatic penalty.
· On the one hand, this penalty must be expressly fixed in the police.
* On the other hand, the delay must cause harm to the insurer (inability to organize an expertise quickly and keep evidence, for example).
If these two cumulative conditions are not met, the insurer cannot take advantage of the delay to refuse coverage.
In the judgment submitted to this comment, the judges on the merits clearly characterized the damage suffered by the insurer as a result of a late declaration. On the other hand, they did not note whether the police expressly provided for the penalty of forfeiture of guarantee in the event of late declaration, which the appeal did not fail to raise before the Court of Cassation.
” (…) Having regard to article L. 113-2, 4°, of the insurance code in its wording applicable in the case ;
Whereas, according to the judgment under appeal, the company Orly paradise has subscribed to the company X (the insurer) a multi-risk residential contract “Gold” for an apartment located in Morne Lacroix in Martinique and a multi-risk property contract ” MPI ” for other residential premises located at the same address ; whereas on 3 January 2012, the manager of that company sent the insurer a statement of claim concerning damage caused to electrical appliances in November 2011 ; that the insurer having refused its guarantee and then having paid the company Orly paradise the sum of 4 150,63 euros under the MPI contract, the latter assigned it in payment of certain sums in order to obtain the full coverage of the claim ; that the company Orly paradise has been placed in liquidation, that following the closure of this collective procedure, its activity has been continued by the company Rêve bleu ;
Whereas in order to dismiss Orly paradise from its claims, the judgment states that according to the provisions of article L. 113 – 2 of the insurance code, the insured is obliged to give notice to the insurer, as soon as he has become aware of it and at the latest within the period fixed by the contract, of any claim likely to result in the insurer’s guarantee, this period, notes that under the terms of the two insurance policies the declaration of loss had to take place within five working days of its occurrence and that it follows from article L. 113 – 2 of the insurance code that the insurer can validly claim the loss of guarantee only if it proves that the delay in the declaration caused him damage of sufficient importance, which was the case in this case ;
That in ruling thus, without seeking, as it was invited, whether the applicable contractual provisions provided for forfeiture in the event of a late declaration, the Court of appeal deprived its decision of legal basis ; ON THESE GROUNDS: BREAKS AND ANNULS ( … )”.
The judgment therefore confirms the well-established case-law on the matter and recalls the conditions for the validity of the refusal of coverage on grounds of forfeiture.
To go further, it must be remembered that a forfeiture clause will be valid only if it is mentioned in very apparent characters in accordance with the drafting requirements imposed by article L. 112-4 of the Insurance Code.
Finally, a forfeiture clause must be unambiguous, that is, it must be clear, special and precise, in that it knows under what conditions exactly it will not be guaranteed. Otherwise, it may be declared unenforceable against the insured by the court, i.e. unenforceable.
Let us recall, on the latter point, that the insurance contract is interpreted against the drafter, who is most often the insurer. Against the drafter of act means in the sense of applicability of insurance coverage.