Recoveries and subrogation in credit insurance

Opening judgment on March 3, publication in the BODACC on March 12: creditors have two months to file with the court-appointed representative, four if they are based outside mainland France (article R. 622-24 of the French Commercial Code). Under a credit insurance policy, the insurer usually files, and for the whole debt, insured and uninsured parts alike. Collection started earlier. An invoice stays unpaid beyond the period set by the policy, often 60 to 90 days past due: the insured notifies it and hands over the file, and the insurer chases, serves formal notice, negotiates a payment plan, all under mandate. If the debtor pays during the waiting period, there is no claim, only collection costs, which the policy allocates. Once the indemnity is paid, the insurer is subrogated to the insured's rights up to what it paid, under article L. 121-12 of the French Insurance Code and through the subrogation receipt the insured signs. It pursues the debtor or its guarantor, proves in the distribution, reclaims goods held under retention of title. What comes in, net of costs, is shared pro rata to the insured percentage: at 90% cover, nine tenths to the insurer, one tenth to the insured. Disputes arise over the debt above the approved limit. Some policies split recoveries between the insured and uninsured parts in proportion to their amounts, others apply them first to one of the two, and on a liquidation dividend the difference is real money. The insured, for its part, must do nothing that closes off recourse: a debt waiver or extra time granted without the insurer's consent can discharge the insurer to that extent (article L. 121-12, second paragraph).