Exclusions from guarantees: the Court of Cassation continues to take a tougher stance with insurers!

After a 2021 marked by the Court of Cassation's blows against the mechanisms allowing insurers to be relieved of their guarantee obligations ( questioning of the two-year limitation period , expansion of the unenforceability of exclusions that are neither formal nor limited , strengthening of the requirement relating to the very apparent nature of exclusion clauses ), observers expected a calmer 2022.

It is not necessarily heading in that direction. Indeed, the High Court has recently resumed what now resembles a crusade, this time attacking the legal mechanism for excluding intentional misconduct .

Article L.113-1 of the insurance code states that "the insurer is not liable for losses and damages resulting from an intentional or fraudulent fault of the insured" .

Since a ruling of October 7, 2008 which ended the assimilation between intentional fault and fraudulent fault, it seemed understood that intentional fault required, in order to be characterized, a will to cause the damage, whereas a simple risk-taking making the occurrence of the damage inevitable, seemed sufficient to characterize fraudulent fault.

In a case where the question arose of the compensability of damages caused by a suicidal act (positioning oneself on a railway track at a level crossing), the Court of Cassation decided, in a judgment dated January 20, 2022 , to revisit the notion of intentional misconduct, which it now defines as "a deliberate act by the insured committed with the awareness of the inevitability of its damaging consequences" .

In other words, it is now up to the insurer who intends to raise the issue of intentional misconduct (which until now was easier, in principle, to characterize than intentional misconduct) to demonstrate that the insured, having deliberately committed the act that caused the damage, was "aware" that his action would have material consequences.

The application of this definition to the case at hand naturally led the Court of Cassation to censure the appeal judges who had upheld the existence of intentional misconduct when the insured's awareness of the inevitable nature of the damaging consequences of her action had not been "characterized" .

This raises the following question: how will the insurer be able to provide such proof?

Because resources may be lacking, wouldn't insurers have an interest in inserting exclusion clauses into their contracts that target, while redefining, intentional misconduct?

This is precisely what the insurer had done in our case, whose contract stipulated that "damage intentionally caused or provoked by any insured person or with their complicity" .

As worded, such an exclusion raised the question of what should be understood by "caused damages" and, for example, whether these should include damages caused by the insured without the intention of causing them, as seemed to be the case here.

And that's where the problem lies because, as the High Court regularly reminds us, the mere fact that an exclusion clause needs to be interpreted is enough to demonstrate that it is neither formal nor limited, and therefore cannot be applied.

Could insurers consider abandoning the field of exclusions and instead focusing on the much less regulated field of defining the insured risk, so that damages, even unintentional, caused by a deliberate act do not fall within the scope of coverage?

While generally legal and widely used by insurance professionals, this practice has not yet been the subject of any particular criticism from the Court of Cassation. Not yet….