Two year time bar in insurance
The two-year period extinguishing actions arising from an insurance contract, unenforceable if the policy fails to recite the grounds that interrupt it.
Third civil chamber, March 21, 2019: an insurer whose policy failed to recite the limitation rules required by Article R. 112-1 loses the two-year time bar, and cannot fall back on ordinary limitation either. Under French law, all actions arising from an insurance contract are time barred after two years. That is very short next to ordinary limitation, and the justification is the need to close files and release reserves. The starting point depends on the nature of the action, and it alone accounts for a large share of the litigation. In principle it runs from the event giving rise to the claim. It is deferred to the day the policyholder learned of the loss if they did not know of it, and, in liability insurance, to the day of the third party's claim. The price of that brevity is a strict disclosure duty: the policy must recite the grounds that interrupt and suspend the period. If it does not, case law simply bars the insurer from relying on limitation at all. A special ten-year period also protects beneficiaries in bodily injury cases. The short period answers indefinite uncertainty over the liability, which no amount of reserving could absorb.
Article L. 114-1 of the French Insurance Code sets the two-year period and article R. 112-1 requires the policy to recite the grounds that interrupt it. Since 2005 the second civil chamber of the Court of Cassation has held that an insurer omitting that recital cannot raise limitation against its policyholder. That sanction settled in one line an information imbalance decades old.
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