Structural damage and insurer bankruptcy: explanations


Are you subject to the obligation to take out book damage insurance? What happens to this contract in the event of the insurer’s bankruptcy? Answers.

Several insurers have gone bankrupt in recent months leaving thousands of people without collateral. Most of the time, policyholders ignore it and only find out about it during a loss. Find out what precautions to take before purchasing property damage insurance and how to know if you are affected by possible bankruptcy.

Obligation to take out damage insurance

Structural damage insurance is required of all project owners, in particular individuals who have a major renovation built or carried out such as an extension or an elevation. This contract must be taken out before the start of work, in accordance with Article L 242-1 of the Insurance Code.

This insurance provides prefinancing for ten-year damage, that is to say damage that could affect the solidity of the construction or render the structure unfit for the use for which it was originally intended. It makes it possible to obtain the reimbursement or the execution of repairs falling under the ten-year guarantee, without waiting for a court decision settling on the responsibilities of each.

The law does not provide for any sanction against individuals who voluntarily or not omit to take out property damage insurance. However, in the event of non-subscription, not only will compensation for any poor workmanship take longer to obtain, but in the event of resale of the property within 10 years following the end of the work, the owner will remain personally liable vis-à-vis new buyers of the consequences resulting from the lack of insurance.

Bankruptcy of an insurer: what are the consequences?

When they seek to be compensated for damages arising from property damage insurance, policyholders are more and more frequently confronted with the bankruptcy of the insurer, a phenomenon which mainly concerns companies governed by foreign law.

You should know that insurers registered in a country of the EU or the European Economic Area (EEA) can cover risks that have arisen in France thanks to the approval of the regulator of their country of origin. These insurers are therefore not subject to the control of the French authority. This can be problematic in the absence of compensation for victims who have hitherto paid their insurance premium. The only way out for the latter lies in the compulsory insurance guarantee fund (FGAO) which, since 1er July 2018, extended its scope of intervention to insurers operating in France in the area of ​​structural damage.

More specifically, the role of the FGAO is to take charge of claims relating to property damage insurance in the event of liquidation of the French or foreign insurer concerned. To enter it, simply return the compensation form, attaching all the necessary supporting documents.

What precautions should be taken ?

Several precautions can be taken to avoid ending up in such a situation. First, it is important to remember that a large number of low-cost insurance companies based abroad have recently gone bankrupt. However, these actors are not controlled by the ACPR and may employ risky practices. Thus, it is advisable to turn to a French insurer and not to focus only on the price when subscribing. Indeed, other elements deserve special attention such as the financial soundness of the insurer or the services it offers.

Then, the use of an online comparator is recommended to sort through the many offers on the market. This free and non-binding tool allows you to obtain personalized quotes in a few clicks.

In general and to find out if the insurer with which you have taken out damage insurance has gone bankrupt, you can refer to your insurance certificate. This document contains the insurance policy number allowing you to read this information.

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