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What Constitutes a Claim under Insurance Law? - International Law Office

International Law Office

Insurance - France

What Constitutes a Claim under Insurance Law?

March 14 2006

Out-of-Court Claims
Court Claims
Comment


By allowing 'claims made' clauses to be introduced in liability insurance policies, the Financial Security Act 2003 reversed a line of authorities dating from the 1990s, thereby highlighting the importance of the concept of claim.

The act does not define a 'claim', but Article L124-1 of the Insurance Code provides that insurance policies may be triggered by claims made against the insured either in or out of court.

Out-of-Court Claims

Courts have developed a wide concept of what constitutes an out-of-court claim. The key criterion for characterizing such a claim is whether the third party intends to hold the insured liable. As long as evidence of such an intention is adduced, there is no requirement as to the form of the claim.

Accordingly, courts have accepted that claims may be made orally (even though this raises problems of proof) or through any type of correspondence (eg, email, fax or letter sent by ordinary and recorded mail), provided that it is clear from the document that the third party intends to hold the insured liable.

This is confirmed by the annex to Article A112 of the code, which provides that the liability of the insured may be sought by, among other things, a letter sent to the insured (or to the insurer, thanks to the third party's right of direct action against insurers under French law).

Court Claims

Under the law, a distinction must be made between proceedings on the merits and summary proceedings for an interim order.

Proceedings on the merits undoubtedly constitute a claim where their purpose is to seek a judgment holding the insured liable and ordering payment of damages to the claimant.

However, whether summary proceedings constitute a claim was the subject of debate. Summary proceedings for an interim payment (ie, where the insured's liability is so clear that the third party is entitled to apply for an order for interim payment on account of damages to be awarded in future proceedings on the merits) unquestionably qualify as a claim within the meaning of insurance law, as they necessarily imply that the third party seeks to hold the insured liable. However, regarding summary proceedings for the appointment of an expert, the existence of a claim was debated. The lack of discovery and rare use of oral testimony sometimes make it difficult for litigants to establish the facts necessary for the court fully to understand the matter referred to it. If the matter involves technical issues, each party does not retain its own expert: rather, a single expert is appointed by the court, either on application by one of the parties or on the court's motion.

Experts may also be appointed before proceedings on the merits by a summary proceedings judge, particularly where there is a risk of evidence disappearing. The court has discretion to determine the expert's terms of reference. During the investigations conducted by the court-appointed expert, the parties are free to be assisted by any expert of their choice. The opinion of court-appointed experts, although not binding on the court, will in practice carry more weight than the opinion of a private expert on which a party may seek to rely.

Questions may be raised as to whether a writ of summons to attend summary proceedings constitutes a claim where the third party has suffered a loss and applies for the appointment of an expert to determine the cause(s) and extent of the loss. Characterizing such a writ as a claim may be difficult, since summary proceedings do not directly aim to hold the insured liable, especially where the primary purpose of the proceedings is to collect evidence for determining the cause(s) of the loss.

However, in a June 18 1996 decision the Cour de Cassation laid down the principle that summary proceedings for the appointment of an expert constitute a claim for the purposes of insurance law. The decision is based on the assumption that the sole purpose of summary proceedings for the appointment of an expert is to pave the way for a future action on the merits seeking to hold the insured liable. Such proceedings should therefore be regarded as a logical prerequisite to a liability action on the merits.

Comment

It is highly likely that the act did not give a statutory definition of a 'claim' because the concept had already been defined by the courts for the purposes of insurance law.

In a nutshell, any correspondence or institution of proceedings on the merits or summary proceedings (seeking an interim payment or the appointment of an expert) against the insured qualifies as a claim, as long as the third party's intention to hold the insured liable is certain.


For further information on this topic please contact RĂ©mi Passemard at BOPS (SCP Bouckaert Ormen Passemard Sportes) by telephone (+33 1 70 37 39 00) or by fax (+33 1 70 37 39 01) or by email (remi.passemard@bopslaw.com).



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