Turn of the screw on insurance contracts: the Court of Cassation increases the pressure 

The year 2021 will undoubtedly mark a turning point in the fight of the Court of Cassation in favor of strengthening the protection of insured persons against the mechanisms of insurance law which have the effect of limiting, if not annihilating, their right to compensation, in situations where they have nevertheless paid a premium and suffered a loss which they thought they were covered.

As we know, a huge part of insurance litigation stems from the difficulties surrounding the application of exclusion clauses, governed in particular by articles L.112-4 and L.113-1 of the insurance code, and the two-year limitation period, provided for by article L.114-1 of the insurance code .

In three acts, the Court of Cassation has just demonstrated its determination to improve the situation of policyholders. A look back at the facts.

• Expansion of the effects of the unenforceability of exclusions
• Strengthening the requirement regarding the "very conspicuous" nature of the design
• The attempt to challenge the two-year statute of limitations

Expansion of the effects of the unenforceability of exclusions

Expanding the effects of the unenforceability of exclusions that are neither formal nor limited

Until recently, the situation was as follows: in order to be validly enforceable against an insured, the exclusion of coverage invoked by the insurer, written in very conspicuous characters, had to be formal and limited, which implied among other things that it did not require interpretation to be understood by the unfortunate insured ( Cass. Civi. 2nd, November 26, 2020, appeal no. 19-16.435 ), under penalty of being deemed unwritten.

In the case of clauses containing several exclusions, which are the most numerous in practice, it was accepted on the other hand that the sanction of unenforceability was applicable only if the exclusion actually invoked by the insurer to refuse its guarantee was flawed, which was not the case when it was another exclusion, appearing in the same clause, which was neither formal nor limited.

It is this paradigm that the Court of Cassation overturned, ruling that it mattered little whether an exclusion clause formally and limitedly listed the pathologies excluded from the guarantee, since one of them, which was not even mentioned by the insurer (in this case, "back pain") was neither formal nor limited ( Civ. 2nd, June 17, 2021, appeal no. 19-24.467 ).

In practice, this makes it possible to overturn an exclusion even if it is perfectly formal and limited!

Strengthening the requirement regarding the "very conspicuous" nature of the design

Strengthening the requirement that clauses stipulating nullities, forfeitures and exclusions must be "very conspicuous"

According to extensive case law, the requirement in Article L.112-4 of the French Insurance Code regarding the conspicuous nature of clauses was ultimately interpreted as obliging insurers to reproduce clauses stipulating nullities, forfeitures, and exclusions in such a way that they visually "stand out" from the others. It was therefore recommended to display them in bold, underlined, or capital letters, provided that the other clauses of the contract did not use this typography, thus creating a "contrast" effect.

In a ruling that could almost have gone unnoticed ( Cass. Civ., October 14, 2021, appeal no. 20-11.980 ), the Court of Cassation has nevertheless just ruled that the "very apparent" nature of a clause subject to article L.112-4 of the insurance code should be assimilated to the obligation " to draw the insured's attention specifically to the nullity it stipulated" , in a case where the disputed clause had been reproduced in bold characters, contrary, it seems, to the other clauses of the contract, which appears to condemn methods whose effect is only to produce an effect of "contrast".

The attempt to challenge the two-year statute of limitations

The attempt to challenge the two-year limitation period of Article L.114-1 of the Insurance Code.

Article 25 of the Law of July 13, 1930 (known as the "Godart Law") subjected actions arising from (land-based) insurance contracts to a two-year statute of limitations. This was due, at the time, to the burden that archiving contracts for the standard ten-year period would have placed on insurers. This statute of limitations is now found in Article L.114-1 of the Insurance Code.

On October 7, 2021, the Court of Cassation decided to refer a priority question of constitutionality, formulated as follows:

"Is Article L.114-1 of the Insurance Code contrary to the principle of equality before the law (...) since it subjects actions arising from the insurance contract brought by non-professional insured parties against their insurer to a limitation period of two years, whereas, in other contracts, actions brought by consumers against professionals are subject to the five-year limitation period under common law provided for in Article 2224 of the Civil Code?".

While the Constitutional Council's response is difficult to predict, the message sent to insurers remains clear, as illustrated by certain recent decisions (for example, Cass. Civ. 2nd, April 18, 2019, appeal no. 18-14.404 , affirming the obligation to reproduce in the contract the ordinary causes of interruption of the statute of limitations under penalty of unenforceability of the latter)!

Conclusion :

The unenforceability of exclusions, however formal and unlimited, the strengthening of the obligation to draw the insured's attention to nullities, forfeitures and other exclusions, the questioning of the two-year statute of limitations…the noose continues to tighten on insurers, already forced in 2020 to finance, outside the contract, part of the financial consequences of the health crisis, as their contracts are not intended to cover pandemic risks.

Jefferson Larue , partner lawyer