Home Insurance and Natural Disasters
Friday 01 June 2012
The statutory scheme of house insurance for natural disasters is to be reformed, including mandatory soil investigations for new homes.
One of the main aims of the new regulations is to incite a greater level of preventative action, notably in relation to the structural movement of property due to expansion and contraction of the soil.
The problem is known as mouvement de terrain différentiel consécutif à la sécheresse et à la réhydratation des sols.
Accordingly, it is proposed to identify those areas of the country where this risk exists, and to make the sale of building land in these demarcated zones subject to a soil investigation.
The cost of the investigation will be the responsibility of the seller, and the report will be required to be annexed to the sale contract. The new owner will then be under a legal obligation to provide the report to the builder.
At this stage the scope of the soil investigation has not been determined, so it remains unclear whether the seller will need to arrange for boreholes to be dug, or whether a desk-top investigation will be all that is required.
Under the draft regulations new homes under 10 years old are also to be excluded from the State backed scheme of compensation for natural disasters. In future, such properties will need to be covered exclusively under the 10 year building guarantee that comes with every new property.
The problem for home owners is that not all builders take out an insurance policy to protect them against claims under the statutory 10 year guarantee (despite a legal requirement to do so), as a result of which it can sometimes be difficult to get the builder back on site to sort out any problems.
Clearly, therefore, anyone proposing to have a new home constructed should ensure the builder has in place an assurance décennale.
You can read more about such insurance protection in our Guide to Building a New Home in France
Unlike the system of house insurance in the UK and many other countries, in France the State intervenes to regulate compensation to insured home owners in the event of a natural disaster.
Under the 'régime d'indemnisation des catastrophes naturelles', compensation under an insurance policy for a natural disaster only occurs when one is officially declared by the government.
The declaration procedure and the procedure for claims is explained in our Guide the House Insurance in France.
The new measures do not change substantially how householders need to make a claim, although in a typically French way it is proposed to define an exhaustive list of catastrophes naturelles that would trigger an insurance pay-out.
These proposals include a more precise definition of the nature and scale of such ’acts of God’, with the implication that natural disasters that do not reach the threshold set out in the regulations would not be covered by the statutory scheme of compensation.
Thus, it seems from the draft proposals that compensation for catastrophes naturelles will no longer be available for damage caused by high winds, for which home-owners will need to make a claim in the normal manner under their house insurance policy.
By contrast, it is proposed that damage caused by hail and heavy snowfalls will become obligatory in all home insurance polices. Such events are not ordinarily covered by the régime d'indemnisation des catastrophes naturelles and are not automatically covered in all house insurance policies.
There has been substantial lobbying for many years from French insurers for a stricter framework for compensation for natural disasters, as the cost to them resulting from such events has escalated in the last decade.
The introduction of the new regulations has been interupted by the French presidential elections, but it is unlikely they will be abandoned by the new government.
This article was featured in our Newsletter dated 01/06/2012