Yawn… for some, insurance policies are the most complicated things to get their heads around. We’ll it’s almost the same for us apart when we’re talking about building insurance. In this article we will try to help you understand the different insurance policies you may come across when building in France. In insurance jargon, we will be talking about the Assurance Dommages-Ouvrage policy and the Responsabilité Civile Décennale. Both of them concern real estate construction. Here are a few explanations…
According to French law, any habitable building must be guaranteed against defects (i.e. falling apart) by its builder for a period of 10 years.
In this context, the builder or contractor has the obligation to be covered by a Responsabilité Civile Decennale policy, aka RC Décennale. This policy will guarantee his works for a duration of 10 from the day the building has officially been delivered.
A long time ago, because of untrustworthy builders (the ones who would work without an insurance policy for insance), the French law was reinforced to protect consumers and that’s when the Assurance Dommages-Ouvrages was invented. The Assurance Dommages-Ouvrages policy is a householder’s defect policy. It protects the building in the case of a defect for a duration of 10 years, but this one has to be taken out by the end user, aka the home owner.
Both these insurance policies cover the construction for 10 years. But, the 10 year warrantee RC Décennale has to be taken out by the builder and the latter, the Dommages-Ouvrage, has to be taken out by the home owner.
A bit of vocabulary
Before venturing out to describe both insurance policies, it’s really crucial to understand the different stages of a building site because these determine the validity of each building insurance policy.
- The “ouverture du chantier” or site opening date : is the official date the first shovel digs in the ground.
- The “date de réception du chantier” is the official delivery date of the site. In France there should be an official receipt written up called the “Procès Verbal de Reception”. This document signs off the works and states that the works are completed (or that they have been completed but need a few extra things done to be completed called the “réserves”). But beware, the official delivery date can be tacit: basically if you’ve moved in, it replaces an official works receipt.
- The one year period of “parfait achèvement des travaux” (perfect completion of works) : this is a one year period following the delivery date. It’s a one year period where the contractor or builder has to repair any defaults at his own expense, before the 10 year insurance policy takes over.
The ‘assurance dommages-ouvrage’ (DO), a defect insurance for householders
The thing with defects is that nobody wants to take the blame. The builder will blame the plumber or the architect, who will blame the electrician, who will blame the joiner etc and it could potentially take years for legal action force any repairs to get done. In the meantime, your home will have had time to fall apart and lose its value. The role of the DO is to make sure the homeowner gets the repairs done as soon as possible and that the repairs are paid for asap by the insurance company. In fact, nowadays in France, banks will not lend you any money if your building project isn’t insured by a DO policy.
Once a claim is made within the DO, there will be one expert visit and then the insurance company will take over legal action against the incriminated parties, no questions asked.
Why apply for a DO?
The DO policy is mandatory if you are getting a mortgage to fund your construction project. In fact, very few banks will accept to lend you any money if there isn’t a DO involved. Also, as a DO is the norm, it could lead to prejudice for you if you don’t have one, should you decide to sell your property.
In fact, if you sell your property under the 10 year period, the new owners will be insured by the DO policy until it expires and this is great if you want to add value to your property.
What does a DO cover?
The DO covers, for a 10 year period following the receipt of works, any defects that compromise the solidity of the property (even subsidence). However, it does not cover mobile parts of the property such as doors or windows, or esthetic defects.
However, the DO does not guarantee any damages caused by the homeowner. It doesn’t cover normal usage, a fire, an attack, a cyclone or any other force majeure cases. You can subscribe for options such as immaterial damages that will cover a loss of usage of the house for example.
When to apply ?
The DO contract must be signed before the official “date d’ouverture du chantier” (see vocabulary above). It will start a year after the official delivery of the site, at the same time as your contractor’s policy.
It usually takes 3 months to find an insurance broker or an insurer and put together an application for a DO contract. Please be aware that these things are time consuming, so you will want to plan ahead.
The RC Décennale warantee
The RC décennale is the abbreviation of Responsabilité Civile Décennale. It is the contractor’s insurance policy.
A contractor is responsible towards the homeowner of any damage (even from subsidence) to the solidity of a building that would make it unsuitable for its destination.
In the list of contractors, the law includes:
– architect, builder, technician or any person bound contractually to the homeowner by a contract (such as a supervisor or project manager)
– the seller of the property
– property developer
– the technical supervisor
What are the contractors liable for?
The builders or contractors are liable for the integrity of their constructions 10 years following the delivery receipt. This also means that it’s up to the contractor to prove that they’re not responsible for the damage : force majeure, a third party or the owner.
The “Responsabilité Civile” part of their policy covers the companies during the project: if somebody get’s hurt during the works or if the building is destroyed. It’s a professional liability policy.
What does the RC Decennale cover?
The policy covers the payment of any repairs to the building if the contractor is judged responsible. This policy covers any material damages resulting from hidden defects from the delivery date “pv de réception” to the 10 year anniversary. The damages concerned have to be quite important and imply :
– compromising the integrity of the building
– making the builduing unsuitable for its destination. This is quite subjective and is interpreted on a case by case basis.
Also, the contractor must have an insurance policy that was valid on the “date d’ouverture du chantier” which could be months or years before they started working for you. However, if the company was inexistant when the site opened (for example a new business), it has to have been insured as of the very first day of existence.
Important : you must pay attention to the type of RC Decennale that your contractor shows you.
When you work with a contractor, you must make sure their RC Decennale policy has a “par capitalisation” notice added, as opposed to “par répartition”. This means that your building will indeed be covered by the contractor’s insurance company for 10 years regardless of the fact your contractor is in business or not in 10 years time. That can make a whole difference, because if the contractor is only covered by a par répartition policy, the day their company goes out of business, you’ve lost all the benefits of their 10 year warrantee.
Without a doubt, BLR International has a “RC Decennale par capitalisation” policy that guarantees our buildings and pools.
In France you can enquire for Dommage-Ouvrages (DO) Insurance policies with the SMA-BTP or AXA assurances who have pretty good policies when it comes to construction, a good insurance broker too is Montmirail Assurances. Want to find out more about insurance policies? don’t hesitate to comment below and we will be happy to answer any questions.