New French law expands riot insurance coverage

France has introduced a new legal framework to modify insurance coverage for damage caused by riots. The change replaces Article L. 121-8 of the Insurance Code, which previously exempted insurers from liability for losses from riots unless explicitly agreed upon. The new Article L. 12-11-1 now extends coverage for property and vehicle damage caused by riots on French territory, including loss of profits if such coverage is already part of the policy.

Riot defined with specific criteria

The new law defines a riot as a collective action against public authority, involving violence and aimed at expressing protest or pursuing political or social claims. This definition requires several conditions to be met simultaneously, and not all acts of violence or vandalism during a gathering automatically qualify as a riot under the law. The law also excludes foreign or civil war, terrorist acts, and certain cyberattacks from the definition.

Commission to assess riot status

A new commission has been created to determine whether an event qualifies as a riot. This body will evaluate factors such as the number of participants, the extent of material damage, and the actions taken by authorities to maintain order. The commission’s procedures will be outlined in a decree from the Council of State, though details on how to assess economic damage and apply findings to specific claims remain unclear.

Law not yet in effect

The new insurance framework is not yet operational, pending a decree that ensures compliance with European Union regulations on state aid. Until then, existing insurance rules and contractual guarantees remain in force. While the reform marks a significant shift in how riot-related damage is covered, it does not fully resolve the question of how to classify such events.

State liability for crowd-related damage

The potential for insurers to seek compensation from the state is a key issue in handling riot-related claims. French law establishes a no-fault liability for the state in cases where damage is caused by crimes or delicts committed by crowds or gatherings, under Article L. 211-10 of the Internal Security Code. This removes the need to prove fault by public authorities, but it requires proving the damage directly resulted from such actions.

Challenges in state liability claims

Recent legal cases, such as those in New Caledonia, highlight the difficulty of proving state liability based on administrative negligence. Courts have distinguished between administrative negligence and the specific conditions required for liability. The new insurance law does not alter these legal requirements but emphasizes their importance for insurers handling large-scale claims.

Insurers may seek compensation from third parties

Under Article L. 121-12 of the Insurance Code, insurers can pursue subrogation rights against third parties, including the state, to recover amounts paid to policyholders. With the new riot coverage framework, these recourses may become more important as the financial burden of such claims is shared among insurers. The success of these claims depends on careful documentation and anticipation of potential liability scenarios.