Trying to understand the process of terminating a car or house insurance policy in France could probably qualify as a top twenty brain teaser.
French insurers would sometimes like you to believe that your car and house insurance policies are renewed automatically unless you terminate giving due notice.
Strictly speaking, this is true, although there are procedures the insurer needs to comply with to ensure this clause is operational, and in some circumstances the rule does not apply.
The principle on which most French insurance policies operate is that silence on the part of the insured implies acceptance by you of renewal of the contract.
Most contracts of insurance require that two months' notice to terminate prior to the expiry date is given, failing which it is automatically renewed for a further year. Sometimes one month's notice is required.
Accordingly, if the expiry date of your insurance policy is 1st April, and your policy requires two months notice, you need to notify the insurer in writing by 31st January at the latest that you wish to terminate the policy. You would be best advised to do so by a letter sent recorded delivery.
To help in this process, insurers are obliged to give you due notice of the prospective expiry date of the contract, giving you the opportunity to terminate if you so desire.
This information is often accompanied by notice of the new premium and any changes in the policy.
If the insurer fails to give proper notice you are at liberty to terminate the contract at any time, and receive reimbursement of any premiums paid that cover any later period.
If the notice advising you of your right of termination is received less than 15 days before the final date allowed for termination, or after the date within which you are entitled to terminate, you are granted a further period of 20 days to terminate the contract.
Thus, using the example above, if you received the notice of expiry between 16th January and 1st April, you are entitled to 20 days to terminate the policy
The period of 20 days runs from the date when the letter was sent by the insurer, not when it was received by you.
We have heard of examples where the date on the letter providing information on the right of termination was dated some weeks in advance of the date it was actually received.
In these circumstances, unless you could prove by the date stamp on the envelope that the letter was posted on a later date, it would be possible for the insurer to argue you had received due notice, which you had failed to act upon.
As we stated above, it is not always necessary to give two months notice to terminate the contract. There are circumstances when it is possible to do so giving only one months notice, or less.
Change of Risk
If by virtue of a change in circumstances you decide to change the level of risk covered by the insurance policy, but the insurer refuses to reduce the premium, then you can terminate your policy.
If it did not happen, you would need to send a recorded delivery letter terminating the policy, which would take effect 30 days later. The insurer is then obliged to refund any overpaid premiums.
Change of Personal Circumstances
A change of personal circumstances, such as marriage, employment, retirement, or termination of a business also allow you to cancel your insurance policy.
This right exists only provided the change of circumstances has a material bearing on the level of risk in the policy.
You need to advise your insurer within 3 months of the change of circumstances taking place, and the contract will cease 1 month later.
Thus, if you move on 15th March, and this change of property would affect the level of risk, then the contract will end 16th April.
Increase in the Insurance Premium
Insurance companies often use an indexation clause to change their premiums each year.
If the insurance premium should increase by an amount in excess of that permitted in the contract, then you can terminate the contract, normally on 30 days notice.
You need to read the terms of your policy to be clear on the limits within which the premium may be increased each year without triggering the right to termination, as well as the notice period in the contract.
The clause does not operate where the premium has increased as a result of the loss of, or a reduction in, your no-claims discount, or a new tax, or a new insurance obligation imposed by the law.
Sale of Property/End of Tenancy
If you sell your property, or you terminate the tenancy of a property, then the notice period is 10 days.
Thus, if you sold your house on 1st March, and you send a letter of termination to the insurer the same day, it takes effect 10 days later.
If you fail to terminate, then the contract automatically lapses within 6 months.
Of course, you can also transfer the policy to you new home if you so wish, although a new premium may be payable, depending on the risk to be covered.