Borrower insurance: duty to advise and prescription

Cass.com, January 6, 2021, appeal no. 18-24.954

BNP Paribas grants a loan to an individual, in return for two guarantees: subscription to a borrower's insurance policy and a guarantee by Crédit Logement.

The borrower placed on sick leave requests coverage of the maturities of his loan by the insurer, who opposes the fact that he has reached the age beyond which the risk of illness is no longer contractually covered.

Because of the unpaid installments, BNP Paribas pronounces the forfeiture of the term and claims the balance of the loan from Crédit Logement, in its capacity as guarantor, which pays and turns against the defaulting borrower, who himself turns against BNP Paribas, reproaching him for having badly advised him and thus having made him lose a chance to subscribe to a borrower's insurance adapted to his personal situation.

Seized of the question of whether the borrower's liability action against BNP Paribas was not time-barred, the Bastia Court of Appeal rules that the five-year prescription applicable to the action began to run as soon as of the loan, which is the moment when the insured-borrower was given the information notice containing the insurance conditions of which he is complaining.

to Articles 2224 of the Civil Code and L. 110-4 of the Commercial Code , the Court of Cassation censures this decision on the grounds that the limitation period for the liability action for lack of advice begins to run on the day on which the the insured knew or should have known the facts allowing him to exercise the said action, which corresponds here to the day on which the borrower was opposed to the refusal of guarantee by his insurer because of the limit of age stipulated in his contract.