11. Building Guarantees in France
11.3. Householder Defects Insurance - Assurance Dommages-Ouvrage
The purpose of this insurance is to ensure that, as client, you are satisfactorily protected in the event that the builder, architect or their insurance company does not accept liability for building defects.
They may deny that a defect exists or, if it does, to say that it was not part of their works or to blame a supplier, sub-contractor, architect or builder.
In these circumstances, it might take you years to obtain redress, even if you are ever able to do.
The assurance dommages-ouvrage seeks to remove all of this uncertainty by placing an obligation on your insurer to meet the costs of remedying the defect and leaving it to them to fight the battle as to who is responsible.
It can cover both new build and major renovation works.
11.3.1. Getting Cover
The law requires that an owner takes out the insurance, with Article L.242-1 of the code des assurances stating:
Toute personne physique ou morale qui, agissant en qualité de propriétaire (...), de vendeur ou de mandataire du propriétaire de l’ouvrage, fait réaliser des travaux de construction, doit souscrire avant l’ouverture du chantier (...), une assurance garantissant, en dehors de toute recherche des responsabilités, le paiement de la totalité des travaux de réparation des dommages de la nature de ceux dont sont responsables les constructeurs (...)
Although the law has this requirement in practice this does not always occur, either because of ignorance or cost.
Builders do not publicise it because it makes it easier to bring a claim against them, and some insurance companies do not like it because it is often risky for them.
If you have a house constructed using the standard contract for this purpose, called the CCMI, then it is obligatory for assurances dommages to be taken out.
Nevertheless, there are no penalties for a householder who does not take out the insurance but, if you later decide to sell it may make it more difficult to do so.
The insurance also has some resale value for if you sell the property within ten years the new owner continues to benefit from any years left on the policy.
Likewise, if you do not take it out and then later sell the property it is possible that a new owner could seek legal redress against you in the event that major defects became apparent.
To avoid this risk you would need to make the buyer aware that the ten-year guarantee does not exist and include a suitable clause to that effect in the sale contract.
This insurance is not cheap, costing on average 1.5% of the cost of the works.
So, faced with this potential expense, you need shop around to get the best deal.
One option is to use the insurance company of your builder, who may also offer a more competitive rate, although it may cause a potential conflict of interest!
Alternatively, those companies who are regularly involved in the construction sector may be able to offer the most attractive rate, e.g. Groupe SMABTP.
Try going through an insurance broker (courtier), as they may have discount arrangements with insurance companies that are not available to individual householders.
Whichever route you take make sure you read the small print so that you are making valid comparisons.
You also need to consider the quality of the insurer, as our Newsletter article Construction Insurance Contracts Terminated illustrates.
If an insurer refuses to offer you cover then you should contact the Bureau Central de Tarification (BCT), an independent body established by the government to regulate disputes between insurance companies and their clients.
The BCT can force a company to provide the insurance and to also determine the basic tariff which is to apply!
11.3.2. Terms of Cover
The policy must be taken out before works commence and will provide the cover on the same basis as that of the builders’ insurance.
In other words as follows:
Year 1 - Guarantee of complete performance of the work – la garantie de parfait achèvement.
Years 1 and 2 - Guarantee that fittings are in good working order e.g. electrics, sanitary goods, heating, windows, shutters, and doors – la garantie de bon fonctionnement.
Years 1 to 10 - All those works concerned with the stability and integrity of the building including those elements which ensure the building is wind and watertight eg foundations, floors, walls, staircase, ceilings, door and window frames, major electrical and plumbing defects, roof, framework - l’assurance décennale.
The policy does not cover normal maintenance work or remedial work arising out of the failure of the householder to undertake proper maintenance.
If the householder changes the nature of the works after signing the contract then they must inform the insurance company, who may decide to offer the insurance on new terms.
Most contracts will include an ‘excess’ and possible exclusions. You should also check the indexation clause and process for making a claim.
Some insurance companies also offer consequential damage cover such as loss of rental or costs of renting a property if your home cannot be occupied. These aspects of the cover are discretionary.
In the event of serious defects occurring you need to make a claim on the insurer.
They have 60 days to notify you of their in principle decision and 90 days from the date of the claim to make an offer to you.
If you accept the offer, payment should be made within 15 days.
If you refuse the offer of compensation, but you consider you cannot postpone the work, the insurer must provide to you three-quarters of the amount of compensation offered pending a court decision on the matter.
There are numerous court cases in which judges have reprimanded insurers for non-respect of the rules, so choose your insurer with care.
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