Standard commercial general liability policies

Bodily injury

What constitutes bodily injury under a standard CGL policy?

French civil law and insurance law define bodily injury as any harm to or unwanted alteration of a victim’s body.

Bodily injury encompasses the injury itself, but also the financial and non-financial prejudices that follow this injury, which are, inter alia, evaluated by reference to a non-binding legal nomenclature called the ‘Dintilhac nomenclature’, which lists the types of prejudices victims can claim for as a result of bodily injuries: temporary financial (eg, hospital fees), permanent financial (eg, permanent loss of revenues), temporary non-financial (eg, pain and suffering) and permanent non-financial (eg, handicaps). Moreover, moral prejudice (which is distinct from pain and suffering) can also be claimed for as a result of bodily injury, as can the prejudices suffered by indirect victims (usually the victim’s family).

Property damage

What constitutes property damage under a standard CGL policy?

Standard CGL policies tend to define property damage in a fairly straightforward way as harm to or loss of a third party’s tangible property, objects, substances or animals. Consequential losses, such as loss of revenue or business interruption loss, for instance, would not be covered.

Occurrences

What constitutes an occurrence under a standard CGL policy?

CGL policies governed by French law will either function on a claims-made or a damaging-event basis. In a claims-made policy, the third party’s claim constitutes the occurrence, whereas in a damaging-event policy, it is the occurrence of the damaging event that caused the loss suffered by the third party that constitutes the occurrence.

How is the number of covered occurrences determined?

In France, CGL policies will usually provide that each individual loss constitutes a separate occurrence. In such a case, the total amount the insured can receive by way of a succession of indemnities for several occurrences of the same risk within a given period will therefore depend on: (i) the deductible applicable to each occurrence; (ii) possible per-occurrence limits; and (iii) a total indemnity limit for the risk at issue.

Certain policies may contain loss aggregation clauses, whereby various losses generated by a common cause are treated as a single occurrence, which may, on the facts of a given succession of losses, be more favourable to the insured or the insurer (depending on the prejudice caused by the losses, the deductible and possible per-occurrence limits). Given the financial impact aggregation clauses can have for both the insured and the insurer, they frequently generate coverage disputes.

Coverage

What event or events trigger insurance coverage?

See 'Occurrences'. Depending on the type of policy, coverage will either be triggered by a claim or the damaging event.

How is insurance coverage allocated across multiple insurance policies?

As French insurance law is, inter alia, built on the indemnification principle (see 'Damages'), it governs a multiplicity of coverage situations in such a way that the insured should only receive compensation for the loss effectively suffered and should not make a net financial gain as a result of being in a position to claim for the same loss under several policies.

If, therefore, the insured entered into several analogous or overlapping policies in good faith (and without a view to making a profit in the event of a loss), there are no sanctions and the insured can claim for the entire loss from whichever one of its insurers he or she chooses – and French insurance law provides a mechanism whereby this insurer will, in turn, have the possibility of seeking contributions from the other insurers on risk.

If, however, the insured entered into multiple insurance contracts fraudulently (ie, so as to make a financial profit in the event of an insurable loss), the contracts at issue will be deemed null and void and the insured can face claims for damages.

Law stated date

Correct on

Give the date on which the information above is accurate.

13 December 2019