The insurance contract is an agreement whereby the insurer commits, in exchange for a premium, to compensate the insured in case of risk occurrence. This contract is governed by specific rules that impose obligations on both the insured and the insurer. This article reviews the respective obligations of the parties within the framework of an insurance contract.

## 1. The Obligations of the Insurer

The obligations of the insurer, like those of the insured, are primarily governed by the Insurance Code.

First, there is the pre-contractual obligation of information from the insurer, meaning even before the contract is concluded. Article L. 112-2 of the Insurance Code requires the insurer to provide the insured with a document detailing the price and coverage, as well as a copy of the contract draft and its annexes or an information notice about the contract. This obligation aims to allow the insured to understand the interest and functioning of the proposed guarantees.

Additionally, Article L. 520-1 of the Insurance Code requires the insurance intermediary to provide information about their identity, registration, recourse and complaint procedures, and financial ties to insurance companies.

Next, the insurer, like their intermediaries, has an obligation to provide advice. Article L. 521-4 of the Insurance Code enshrines the obligation of advice and accurate information from the insurer and intermediaries. Thus, the insurer must ensure that the proposed coverage is suitable for the insured’s needs, and this obligation continues throughout the execution of the contract.

This obligation of advice is a duty of means, meaning the insurer must take all necessary steps to properly advise the insured, even if the contract terms are clear and precise. The insurer must also inform the insured about any legislative, regulatory, or jurisprudential developments that could influence the subscribed guarantees or risks.

Examples of insurer breaches include:

– **Inadequate coverage**: The insurer must ensure that the proposed guarantees meet the insured’s needs. For instance, in one case, the insurer failed to account for the exact nature of the insured’s activity, resulting in insufficient coverage for high-value real estate (Court of Appeal of Reims, 1st Chamber, December 6, 2022, No. 21/02146).

– **Lack of information on waiting periods**: Even if the general contract terms specify a waiting period, the insurer must highlight this to the insured, especially if the risk is significant. For example, an insurer specializing in military risk coverage must inform a military parachutist of a one-month waiting period.

– **Incorrect advice on contract stipulations**: The clarity of an insurance policy’s stipulations does not exempt the insurer from their advisory obligation. For instance, an insurer may be at fault for not correctly advising on clauses limiting coverage or excluding certain valuable items.

In summary, the insurer’s obligation to advise includes:

1. Ensuring coverage is adequate for the insured’s needs.

2. Maintaining this obligation throughout the contract duration.

3. Providing information on legislative, regulatory, or jurisprudential changes.

If the insured believes that the insurer or their intermediary has failed to fulfill their obligations, they may consider pursuing their liability with the assistance of a lawyer.

## 2. The Obligations of the Insured

The insured primarily has a duty to declare. Article L. 113-2 of the Insurance Code requires the insured to answer accurately the questions posed by the insurer when subscribing and to report new circumstances during the contract. The insured must respond accurately to the insurer’s questions during the contract’s conclusion, especially in the risk declaration form, regarding circumstances that allow the insurer to assess the risks they are assuming. During the contract, the insured must declare new circumstances that aggravate risks or create new ones, rendering previous responses inaccurate or obsolete. This declaration must be made by registered letter or electronic registered delivery within 15 days of the insured becoming aware of the new circumstances.

In cases of non-compliance with declaration obligations, there are two types of sanctions, depending on whether the failure was intentional or unintentional.

In the case of intentional false declaration, the insurance contract is void. This nullity is provided for in Article L. 113-8 of the Insurance Code, which stipulates that the contract is null in case of omission or intentional false declaration by the insured, when such omission or false declaration changes the nature of the risk or diminishes its evaluation for the insurer, even if the omitted or distorted risk did not influence the loss. The premiums paid remain with the insurer, who is entitled to payment of all overdue premiums as damages.

Examples of contract nullity have occurred in the following cases:

– The insured falsely answered “no” to the question of whether they had experienced cancellations of insurance policies in the 36 months prior to concluding the insurance contract (TJ of Bordeaux, 6th Civil Chamber, July 11, 2024, No. 22/06153).

– The insured failed to declare a previous depressive state (Court of Appeal of Toulouse, 3rd Chamber, May 28, 2019, No. 452/2019, No. 18/02631).

– The insured declared that a vacant and unused agricultural building was a secondary residence (Cass. Civ. 2nd, July 5, 2018, No. 17-21110).

If the false declaration is not intentional, Article L. 113-9 of the Insurance Code applies. In this case, if the false declaration is discovered before any loss occurs, the insurer can either maintain the contract with an increased premium or terminate it. If the false declaration is discovered after a loss, the compensation is reduced in proportion to the ratio of the premiums paid compared to the premiums that would have been due if the risks had been correctly declared.

For example, non-intentionality was established in a case where an insured forgot to mention a previous minor procedure when subscribing to health insurance (Court of Appeal of Versailles, 1st and 3rd Civil Chambers combined, No. 21/07535).

Furthermore, the forfeiture of coverage in cases of false declaration related to the loss may apply if an express and very clear clause in the contract provides for it, and if the insured’s bad faith is established. This forfeiture allows the insurer to refuse any compensation for the loss in question.

For instance, the contract forfeiture was upheld after the insurer proved the insured’s bad faith based on an expert report that revealed the insured made false declarations about damages to movable property not related to the loss or already damaged before it (TJ of Meaux, 1st Chamber, 2nd Section, September 24, 2024, No. 22/05298).

It is therefore crucial to seek advice and support from a law firm, which can help determine which case applies and how to effectively defend oneself when the insurer invokes the nullity of the contract or a forfeiture of coverage.

## 3. When to Take Action Against One’s Insurer?

Article L.114-1 of the Insurance Code states that actions for liability brought by the insured against the insurer for failure to fulfill the duty of information and advice are subject to a two-year limitation period. This period starts running from the moment the insured becomes aware of the breach and the resulting damage.

When the insurer asserts a forfeiture of the contract against the insured, not only must the forfeiture be provided for by a clause in the contract, but also the bad faith of the insured must be demonstrated by the insurer.

In summary, to initiate action against their insurer, the insured must first identify a breach of the insurer’s contractual obligations, particularly regarding information and advice. If they believe the insurer failed to provide necessary information or provided erroneous information, they can initiate a liability action, which must be filed within two years.

The LBV AVOCATS firm is at your disposal to assist you in your efforts.