Calling on Construction Damage Insurance: the 60 and 90-Day Time Limits and the Penalty for the Insurer's Silence

A defect appears in a building delivered four years ago: through-cracks, leaks in the roof terrace, a waterproofing failure in an underground car park. The client (maître d'ouvrage), or the investor that has since acquired the asset, holds a construction damage insurance policy (assurance dommages-ouvrage). Once that finding has been made, everything turns on a timetable: the claim notification starts a sixty-day period for the insurer to take a position on whether the cover applies in principle, then a ninety-day period to make an offer of compensation. Exceeding these time limits is not a mere breach of contract: it allows the insured to commission the works itself and triggers an increase by operation of law to twice the legal interest rate. This guide deals exclusively with the claims phase, from the drafting of the notification to litigation strategy where cover is refused, including the interaction with the summary proceedings for an expert appointment (référé-expertise) under Article 145 of the French Code of Civil Procedure and the ten-year liability action.

The scope of dommages-ouvrage cover: what is pre-financed, what is not

Article L. 242-1 of the French Insurance Code requires any person having construction works carried out, as owner, seller or agent of the owner, to take out insurance guaranteeing, irrespective of any determination of liability, payment of the full cost of the works to repair damage of the kind for which builders are liable within the meaning of Article 1792 of the French Civil Code.

Two operational consequences follow. First, the policy is pre-financing insurance, not liability insurance: the insurer pays first, then exercises its right of subrogated recourse against the contractors and their ten-year liability insurers on the basis of Article L. 121-12 of the French Insurance Code. For an investor, this means that repair funding does not depend on the outcome of liability proceedings that may last several years. Second, the scope is strictly modelled on the ten-year liability regime: cover extends to damage that impairs the structural soundness of the works or that, affecting them in one of their constituent elements or one of their equipment elements, renders them unfit for their purpose, as well as damage affecting the soundness of inseparable equipment elements.

Outside the scope of the compulsory insurance remain purely aesthetic defects, contractual non-conformities that do not render the works unfit for their purpose, malfunctions falling under the two-year functioning guarantee (garantie de bon fonctionnement biennale) of Article 1792-3 of the French Civil Code, and damage attributable to normal maintenance. Many policies nonetheless include optional extensions, in particular cover for consequential non-material damage, damage to existing structures or the functioning guarantee. These extensions are governed by the general law of insurance contracts, and not by the mandatory regime of the standard clauses: the sixty and ninety-day time limits do not necessarily apply to them. The distinction is decisive before any formal notice is given. The allocation of defects between the completion guarantee (garantie de parfait achèvement), the two-year guarantee and the ten-year guarantee is set out in our article on the guarantee applicable to each defect.

The cover in principle runs after the expiry of the completion guarantee of Article 1792-6 of the French Civil Code, for a period of nine years. It nonetheless applies before acceptance of the works (réception) where, after an unsuccessful formal notice, the works contract has been terminated for the contractor's failure to perform its obligations, and after acceptance where, after an unsuccessful formal notice, the contractor has not performed its obligations. This mechanism is under-used on sites where the main contractor is placed in judicial liquidation during performance. The interaction between the contractor's all-risks policy, the dommages-ouvrage policy and the ten-year liability cover where the contractor defaults is the subject of our article on contractor's all-risks insurance.

A key point for the buyer of a recent asset: the cover is attached to the building and benefits successive owners. In an acquisition audit of a building accepted less than ten years ago, collecting the dommages-ouvrage certificate, the acceptance report and its reservations, and the record of claims already notified is the minimum. An asset acquired at a discount because of visible defects may hold cover that can be called on, just as it may on the contrary reveal a claim already notified and refused, and therefore subject to a limitation period already running.

The dommages-ouvrage claim notification: the act that starts the countdown

No time limit runs until the notification has been duly received. The drafting of this document therefore conditions everything that follows.

The standard clauses in Annex II to Article A. 243-1 of the French Insurance Code require specific content. The notification must state the contract number and, where applicable, that of the endorsement, the name of the owner of the damaged construction, the address of the construction, the date of acceptance or, failing that, the date of first occupation of the premises, the date on which the damage appeared, and its description and location.

As to the timing of notification, Article L. 113-2, 4° of the French Insurance Code requires the insured to give notice of the claim as soon as it becomes aware of it and at the latest within the period set by the contract, which may not be less than five working days. Forfeiture for late notification, where stipulated, can be relied upon only if the insurer shows that the delay caused it prejudice. In practice, the forfeiture argument rarely succeeds, but it feeds discussions and delays pre-financing of the works. The notification is sent by registered letter with acknowledgement of receipt, the acknowledgement of receipt being the proof of the starting point of the sixty-day period.

The insurer has a means of neutralising the countdown: where the notification is imprecise or incomplete, it must, within ten days of receiving it, inform the insured and request the missing details or documents. The sixty-day period then runs only from receipt of those items. This request for documents is the delaying lever most frequently used. Two reflexes are needed: document the initial notification exhaustively from the outset, and check that the request for documents was in fact made within ten days and that it relates to items actually missing, not to documents already sent or which the insurer already holds. A late or artificial request does not postpone the starting point.

As to who may notify, the original client, the purchaser or the co-ownership association (syndicat des copropriétaires) for common parts have standing to notify. In co-ownership, the property manager (syndic) must hold an authorisation complying with the rules of the general meeting for later steps, but the protective notification cannot wait.

The insurer's 60-day period: notifying its position on cover in principle

The insurer has a maximum period of sixty days, running from receipt of the claim notification, in which to notify the insured of its decision as to whether the cover provided for in the contract applies in principle (Article L. 242-1, paragraph 3, of the French Insurance Code).

The decision must be notified, that is, reach the insured within the period, and not merely be sent or decided internally. It must give reasons where it concludes that dommages-ouvrage cover is refused.

In the interim, the insurer instructs an expert, except where the amount of the damage is below the low-value threshold set by the standard clauses and the dispute does not concern the nature of the damage. The expert's preliminary report is communicated to the insured, who may make observations before the insurer settles its position. This phase is decisive: it is where the characterisation of the defect is decided, the only ground on which the insurer can usefully refuse cover. The insured has every interest in being assisted by a policyholder's expert, whose cost is modest in relation to the stakes, and in producing its own technical findings and dated photographs.

The insurer may request an extension, but on strict conditions. In the event of exceptional difficulty due to the nature or scale of the claim, it may propose to the insured, before the sixty-day period expires, that an additional period be set for making its offer of compensation. The proposal must be based exclusively on technical considerations and be reasoned. It is subject to the insured's express acceptance and the additional period may not exceed one hundred and thirty-five days. Three checks are therefore needed: was the request made before the sixty days expired, is it technically reasoned, and did the insured expressly consent to it. Tacit agreement does not amount to acceptance. A poorly advised insured that lets an extension request pass without replying extends nothing: the period continues to run.

The 90-day period: the offer of compensation and the test of its adequacy

Where it accepts that the cover applies, the insurer presents, within a period of ninety days running from receipt of the claim notification, an offer of compensation, which may be provisional in nature, intended to pay for the works to repair the damage. The period runs from the same date as the sixty-day period: it is not added to it. The insurer therefore has thirty additional days, not one hundred and fifty.

The offer must allow durable and effective repair of the works. The courts review its adequacy rigorously: the compensation must cover the actual cost of the remedial works on the day they are carried out, including value added tax where the client cannot recover it, the design and supervision fees of the project manager (maîtrise d'œuvre) that are essential to the remedial works, the costs of engineering consultants, scaffolding and site set-up, as well as preparatory works and the making good of parts of the works not affected but whose removal is necessary. A palliative repair, which treats the symptom without removing the cause, does not satisfy the insurer's obligation.

If the offer is accepted, the compensation must be paid within the short period set by the standard clauses after acceptance of the offer. If the insured challenges or refuses the offer, the insurer may pay it three quarters of the compensation offered. This option deserves to be used: challenging the amount does not prevent collecting a first instalment and starting the most urgent works, in particular where the defect affects the usability of the asset, for example a leak that prevents an office floor from being re-let.

The penalty for silence: cover acquired, pre-financing of works and interest at twice the legal rate

Where the insurer fails to comply with one of the time limits provided for in the two preceding paragraphs or proposes a manifestly insufficient offer of compensation, the insured may, after notifying the insurer, incur the expenditure necessary to repair the damage. The compensation paid by the insurer is then increased by operation of law by interest equal to twice the legal interest rate (Article L. 242-1, paragraph 5, of the French Insurance Code).

Two penalties must be distinguished, the effects of which are not the same.

The first is statutory. Exceeding either time limit, like a manifestly insufficient offer, allows the insured to incur the repair expenditure itself and entails an increase by operation of law of the compensation to twice the legal interest rate. The increase is not subject to proof of loss or to any prior demand: it is acquired by the mere fact of the time limit being exceeded. It applies to the compensation actually due, including where that compensation is fixed by the court at an amount higher than the offer. A single formality conditions the right to commission the works: prior notification to the insurer. It must be made in writing, describe the works envisaged and, in practice, be accompanied by quotations, in order to forestall any later dispute as to the need for and the cost of the remedial works.

The second penalty is judge-made and far more formidable for the insurer. The Cour de cassation consistently holds that an insurer that has not notified its position within the sixty-day period may no longer refuse cover: the cover is acquired for the claim notified. The insurer then loses the right to rely on the policy exclusions, on the defects not being of ten-year liability character or on their being attributable to an external cause. The dispute is reduced to quantum. That is why the date of receipt of the notification and the exact count of the sixty days must be established with absolute documentary rigour.

This acquired cover is not, however, unlimited. It applies only to the claim notified, not to distinct defects that appeared later and were not notified. It does not revive a policy that is non-existent, void or expired, nor does it cover a claim arising outside the cover period. Nor does it neutralise the absence of an insurable risk (aléa), where the defects were known to the insured before the policy was taken out. Finally, the cover limits and excesses stipulated for optional extensions retain their effect, the compulsory insurance for its part being unable to include an excess enforceable against the insured under the compulsory damage insurance.

Refusal of dommages-ouvrage cover: building the procedural response

Where the insurer notifies within the time limits a reasoned refusal, arguing for example that the cracks are aesthetic, that the defect falls under the two-year guarantee or that it results from a lack of maintenance, the debate becomes technical. It is resolved by court-appointed expert evidence, not by an exchange of letters.

Summary proceedings for an expert appointment under Article 145 of the Code of Civil Procedure

Article 145 of the French Code of Civil Procedure allows, where there is a legitimate reason to preserve or establish, before any trial, evidence of facts on which the outcome of a dispute may depend, the court to order any legally admissible investigative measures. A defect affecting a structure, disputed as to its nature or its attribution, readily establishes that legitimate reason. The measure is sought in summary proceedings before the president of the judicial court (tribunal judiciaire) for the place where the building is situated. The admissibility conditions of this measure and the framing of the expert's mission are detailed in our article on summary proceedings for an expert appointment before a construction dispute.

The strategic question is not obtaining the expert appointment, which is almost always ordered, but defining the range of parties summoned and the mission. In principle the following must be joined to the proceedings: the dommages-ouvrage insurer, the builder or builders to whom the defects appear attributable, the project manager, the technical control office where relevant, and above all the ten-year liability insurers of each of them. An expert investigation conducted in the absence of a participant will not be enforceable against it, which forces a second set of proceedings and loses several years. Where the contractor has been liquidated, summoning its ten-year liability insurer remains possible on the basis of the victim's direct action.

The mission must be drafted, not copied. It must require the expert to describe the defects, investigate their technical causes, date their appearance, state whether they impair the structural soundness of the works or render them unfit for their purpose, determine the remedial works and their updated cost, assess the non-material losses, in particular loss of rent for a landlord, and give an opinion on attribution between the participants.

The interrupting effect and control of the two limitation periods

Two periods coexist and are not to be confused.

The action against the dommages-ouvrage insurer derives from the insurance contract: it is subject to a two-year limitation period under Article L. 114-1 of the French Insurance Code. Article L. 114-2 provides for specific grounds of interruption, including the appointment of experts following a claim and the sending of a registered letter with acknowledgement of receipt by the insured to the insurer concerning the settlement of the compensation. One check is always needed: does the policy restate the provisions on limitation, its grounds of interruption and its starting point, as Article R. 112-1 of the French Insurance Code requires. Failing that, the two-year limitation period cannot be enforced against the insured. This drafting irregularity saves a significant number of files.

The liability action against the builders and their ten-year liability insurers is subject to the ten-year period from acceptance provided for in Article 1792-4-1 of the French Civil Code. Summons in summary proceedings interrupts that period only as regards the parties summoned (Article 2241 of the French Civil Code), and a new period of the same length runs from the order that brings the summary proceedings to an end (Articles 2231 and 2242). On the other hand, the suspension under Article 2239 of the French Civil Code during the carrying out of the investigative measure does not apply to that period, which is a forfeiture period (Cour de cassation, 3rd Civil Chamber, 10 November 2016, No. 15-24.289). These two timetables must be followed in parallel: an insured absorbed in its discussion with the dommages-ouvrage insurer sometimes lets the ten-year period expire as against the builders and thereby loses its fallback position.

An enforceable chronology: the milestones to be met

• Day 0: the insurer receives the dommages-ouvrage claim notification, sent by registered letter with acknowledgement of receipt and containing all the particulars required by the standard clauses.
• Day 10 at the latest: any request by the insurer for further documents, failing which the countdown is not postponed.
• Before day 60: any proposal of an additional period, technically reasoned, which takes effect only if the insured expressly accepts it, within the limit of one hundred and thirty-five days.
• Day 60: notification of the insurer's position on cover in principle. Failing that, cover is acquired for the claim notified.
• Day 90: presentation of the offer of compensation, provisional where applicable. Failing that, the insured may incur the expenditure after notification, and the compensation is increased by operation of law to twice the legal interest rate.
• If the offer is challenged: three quarters of the compensation offered may be paid, without waiving the challenge to quantum.
• If cover is refused with reasons: summons in summary proceedings under Article 145 of the Code of Civil Procedure, joining the dommages-ouvrage insurer, the builders and their ten-year liability insurers.

Conclusion

Dommages-ouvrage cover is not an ordinary indemnity mechanism: it is a mechanism for pre-financing works whose effectiveness rests entirely on a mandatory timetable. An insurer that lets the sixty-day period expire loses, save in limited cases, the right to dispute whether the cover applies in principle, including whether the defect is of ten-year liability character. That severity shifts the balance of power provided the insured has built its file in advance: a complete notification from the outset, a retained acknowledgement of receipt, a check on requests for documents, a written reply to any extension request, and prior notification before incurring expenditure.

The most costly mistake is to let an amicable negotiation drag on for several months without time-stamping the steps or monitoring the ten-year period running against the builders. Before any discussion on quantum, have an adversarial count of the time limits drawn up from the acknowledgement of receipt of the notification and check whether your policy actually restates the two-year limitation rules: these two checks often determine, on their own, the economic outcome of the file.

Frequently asked questions

Is the 90-day period added to the 60-day period? No. Both periods run from the same date, that of the insurer's receipt of the claim notification. Article L. 242-1 of the French Insurance Code sets a maximum period of sixty days for notification of the position on cover in principle, and ninety days for presentation of the offer of compensation. The insurer therefore has thirty additional days after taking its position, and not a total of one hundred and fifty days.

What exactly happens if the insurer does not reply within 60 days? The text allows the insured, after notifying the insurer, to incur the expenditure necessary for the repair, with the compensation increased by operation of law to twice the legal interest rate. The case law of the Cour de cassation goes further: it holds that an insurer that has not notified its decision within the period may no longer refuse cover, the cover being acquired for the claim notified. Policy exclusions and any challenge to the ten-year liability character of the defect then become ineffective. The debate is limited to the amount of the compensation.

Can the insurer extend the 60-day period unilaterally? No. The standard clauses in Annex II to Article A. 243-1 of the French Insurance Code allow the insurer to propose an additional period only in the event of exceptional difficulty arising from the nature or scale of the claim. The proposal must be made before the sixty-day period expires, be based exclusively on technical considerations and be reasoned. It is effective only if the insured expressly accepts it, and the additional period may not exceed one hundred and thirty-five days. The insured's silence does not amount to acceptance.

Does a request for further documents suspend the countdown? It postpones the starting point, provided it is made within ten days of receipt of the notification and relates to items that are genuinely missing. The sixty-day period then runs from receipt of the further information. A late request, or one relating to documents already provided, has no effect on the count. It is advisable always to reply by registered letter with acknowledgement of receipt in order to fix the new starting date.

Can the buyer of a building call on the dommages-ouvrage policy taken out by the seller? Yes. The cover is attached to the building and benefits successive owners during the cover period, which is in principle nine years after the expiry of the completion guarantee. In an acquisition of an asset accepted less than ten years ago, the dommages-ouvrage certificate, the acceptance report and the history of claims notified must be included in the list of documents audited. A claim already notified and refused requires checking the status of the two-year limitation period under Article L. 114-1 of the French Insurance Code.

Should summary proceedings for an expert appointment be started if the insurer refuses cover? In almost all cases where the refusal rests on the technical characterisation of the defect, yes. Article 145 of the French Code of Civil Procedure makes it possible to obtain an expert investigation before any trial where a legitimate reason exists. The challenge lies in the choice of parties summoned, which must include the dommages-ouvrage insurer, the builders concerned and their ten-year liability insurers, failing which the report will not be enforceable against them. The summons also interrupts the ten-year period under Article 1792-4-1 of the French Civil Code as against only the parties called to the proceedings.

On what basis is the increase to twice the legal interest rate calculated? It applies to the compensation due from the insurer, including where its amount is ultimately fixed by the court at a level higher than that of the initial offer. It is acquired by operation of law, without the insured having to prove loss, as soon as the insurer has not complied with one of the sixty or ninety-day time limits or has presented a manifestly insufficient offer. Article L. 242-1 of the French Insurance Code links it to the compensation paid where the insured, after notifying the insurer, incurs the expenditure necessary to repair the damage: that prior notification must therefore be made in writing and its date retained.