A 2026 ruling clarifies that construction firms aren't automatically excluded from insurance if they knew of a problem, not its cause, at the time of subscription.
Switching insurers involves risks
Switching insurance providers is a routine activity for construction firms, involving renegotiating premiums or ending a policy. However, this period can be risky, as an incident occurring shortly before switching might later be used to deny coverage.Civil liability contracts are key
Civil liability insurance policies known as "based on claim" are especially relevant. These include professional liability, operation liability, or coverage for damage to third parties. They cover claims made during the policy's validity, even for events that occurred before the policy started.Legal limits on insurer liability
According to Article L124-5 of the Insurance Code, insurers are not required to cover claims if they can prove the insured knew about the damaging fact at the time of subscription. However, the law requires identifying what the company should have known, not just what it was aware of.Clarifying the damaging fact
The law defines the damaging fact as the cause of the damage, not the disorder itself. For example, a performance defect or design error would be the damaging fact, not the initial disorder. This rule does not apply to mandatory decennial insurance, which covers works based on specific time frames.Knowledge of a disorder is not enough
In one case, a company was aware of a landslide before subscribing to a claim-based policy. The court ruled that knowing about the disorder did not prove knowledge of the damaging fact, which was a design error. This aligns with a 2022 ruling that emphasized the need to distinguish between a disorder and its cause.Awareness of a problem is not the same as liability
In another case, a manufacturer knew about malfunctions in its heat pumps but was unaware of a manufacturing defect. The court ruled in favor of coverage, as malfunctions do not automatically imply liability. However, if a company was sued before subscription, coverage might be denied, even without a certain claim.Ruling has limited scope
The ruling from October 8, 2026, is not published in the official bulletin, and its full scope is unclear. However, it clearly states that merely knowing about a disorder is not enough to deny coverage, but a claim against the company might be sufficient.Practical steps for companies
Companies should answer subscription questionnaires accurately, especially regarding known incidents. Omitting information can invalidate the contract. Insurers often look for proof that the insured knew about the damaging fact, so it is important to document any disorder separately from its cause. If an incident occurs, report it to the insurer promptly and keep detailed records. If coverage is denied, the insurer must prove knowledge of the damaging fact, not just the disorder. Legal action must be taken within two years of the incident.
