An insurance contract requires the insured to notify its loss within a certain time, and that obligation seems so ordinary that it is treated as a clerical formality. It is not. It is the only obligation whose breach can lose a perfectly acquired cover, on a perfectly covered loss, for a reason having nothing to do with the risk. On a construction site, where a loss is often discovered gradually and where nobody holds the title of person responsible for notifications, it produces more litigation than most exclusions.
The first point to establish is when time starts running, and it is not the day of the damage. Wordings run the period from the day the insured became aware of the loss, which is a matter of fact and not of calendar. A crack appearing in March, photographed in April by a site engineer who judges it harmless, mentioned in June in minutes, examined by an expert in September: what is the date of awareness? The answer determines whether the October notification is in time or out of time, and it is argued on documents nobody wrote with that in mind. That is why the question almost always turns on traces rather than on facts.
The second point is that the awareness in question is the insured's, and on a construction policy the insureds are multiple. Did a subcontractor's site engineer, on seeing the crack, start time running for the project owner? The answer depends on the drafting of the clause, and the module on disclosure of the risk showed the same divergence: some retain the awareness of the persons named as responsible for the insurance program only, others that of any insured. On a site with thirty firms, the second wording sets running periods the policyholder cannot know about.
What the sanction is, and is not, must then be said, because that is where most fears are miscalibrated. Under French law, forfeiture for late notification is not automatic: it requires the contract to stipulate it expressly, in conspicuous characters, and above all requires the delay to have caused the insurer a prejudice. That last point is decisive and often ignored on both sides. An insurer invoking late notification must establish how the delay harmed it: inability to inspect the scene, disappearance of evidence, worsening of the damage for want of protective measures, loss of a recourse against a third party. If it does not establish that, forfeiture does not operate, and the loss settles normally.
That prejudice condition explains an apparent paradox: two identical delays do not have the same effect. A month's delay on a fire attended by the fire brigade, whose cause is documented in an official report and whose debris is still there, harms nobody. A month's delay on a progressive crack, during which the site resumed, poured, backfilled and made good, deprives the insurer of any possibility of inspection, and the prejudice is obvious. It is therefore not the delay that counts, it is what happened during it. That connects exactly with the preservation clause dealt with in the module on proof, and the two are argued together.
The particular case of a lost recourse deserves to be isolated, because it is the prejudice most easily shown by an insurer. If the delay in notifying allowed the time to act against a liable third party to expire, or made it impossible to preserve evidence necessary to that recourse, the insurer loses a quantifiable claim, and the prejudice is computed instead of argued. It is also the case where the insured has fewest arguments, since it destroyed a value that was not its own. On a site, that configuration arises whenever failed equipment is replaced and thrown away before an expert could examine it.
The operational reading therefore comes down to three acts that cost nothing and are done early. Notify a doubtful occurrence rather than waiting for certainty, because a premature notification has no adverse consequence while a late one does. Write, in that notification, what is known and the date on which it became known, which fixes the starting point instead of leaving it to be reconstructed later by somebody with an interest in placing it elsewhere. And name, on a multi-insured site, a single person through whom notifications pass, not to centralize information but so that a simple answer exists to the question of when the insured knew.
On an underground car park project, a site engineer photographs a deformed prop on March 14 and mentions it orally to the site manager, who judges the defect minor. On April 2 the same deformation appears in a photograph annexed to weekly minutes, with no comment. On May 19 localized settlement is observed; the site props, makes good and carries on. On July 3 a partial collapse damages the works: 4.6 million euros. Notification is given on July 9. The policy requires notification within five working days of awareness of the loss, on pain of forfeiture stipulated in conspicuous characters. The insurer invokes forfeiture, relying on the March 14 photograph. What is that position worth?
Two questions the insurer presents as one must be separated. The first is when time started, and its position is not absurd: a photographed prop deformation is an objective fact, and a site that documents it cannot claim to have been unaware. It is nonetheless arguable, because the awareness the clause speaks of is of a loss and not of an anomaly: on March 14 there is neither damage to the works nor an event capable of engaging cover, and running a five-day clock on every anomaly noted on a site would mean requiring hundreds of notifications. On May 19, by contrast, observed settlement is indeed damage, and that is the date most likely to be retained. The July 9 notification would then be seven weeks late. But the second question is the one that decides, and it is often forgotten: forfeiture requires a prejudice to the insurer. Here it is real and easy to establish, and it is not documentary in nature: between May 19 and July 3 the site propped, made good and carried on, so that the insurer lost the possibility of inspecting the prior condition, of stopping the worsening through protective measures, and probably of assessing a recourse against the design office. The non-obvious point is therefore that the file is not lost on the March 14 photograph, which everyone will argue about, but on the seven weeks from May 19 to July 3, during which the site acted alone on a defect it had observed.
- 01Time runs from awareness of the LOSS and not of an anomaly: a documented fact with no damage to the works does not start a five-day clock at every site inspection.
- 02On a multi-insured policy, the clause decides whether a subcontractor's site engineer's awareness starts time running for the project owner.
- 03Forfeiture is not automatic: it requires an express stipulation in conspicuous characters AND a prejudice caused to the insurer by the delay.
- 04Two identical delays therefore do not have the same effect: it is not the duration that counts, it is what the site did during it, which connects with the preservation clause.
- 05A lost recourse is the most easily shown prejudice: it is computed instead of argued, and it arises whenever failed equipment is replaced and thrown away.