Condition exclusion
A restriction removing the consequences of a named condition from cover. The premium stays the same, but the protection is absent precisely where the risk is known.
The Lagarde Law of July 1, 2010: a borrower can insure their loan outside the bank's group contract, provided the cover is equivalent. From then on, condition exclusions can be compared from one contract to another. An exclusion removes from cover the consequences of a named condition; a medical loading, by contrast, keeps the cover whole and raises its price. Exclusions are common in creditor insurance and individual income protection, and two families keep coming back: back conditions and mental health disorders, which happen to be the two leading causes of long-term sick leave. Article L. 113-1 of the French Insurance Code requires an exclusion to be formal and limited. Article L. 112-4 requires it in very conspicuous type. A category vague enough to strip the cover of its substance does not survive in court. The effect is lopsided: an exclusion costs nothing as long as nothing happens, and everything the day a claim comes through the excluded route. Between a cheap group contract loaded with exclusions and a pricier but complete individual contract, the question is therefore first about what is actually covered.
Textbook case: a 40-year-old borrower, covered by his bank's group policy, is off work for six months with depression. The psychiatric exclusion rules out payment of his installments. An individual contract that had bought it back against a loading would have paid them. The question shifts from price to what the cover actually contains.
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