Securing its company against natural and technological risks

Verified 19 December 2024 - Directorate for Legal and Administrative Information (Prime Minister)

A company can be compensated for a natural disaster (flooding, ground movement, etc.) or technological (accident at an industrial site, etc.) if it is insured for these risks. In order for the insurer to be able to compensate the company, an interdepartmental order must recognize that a natural or technological disaster has occurred. We present the information you need to know.

This sheet does not cover the management of climate, health, plant health and environmental hazards in the agricultural sector. These risks are the subject of specific provisions.

Step-by-step approach

Contracts concerned

The insurance contracts systematically including guarantees against the effects of natural and technological disasters are those which guarantee against the following damage:

  • Fire damage
  • Damage to land motor vehicles
  • All other damage to property for residential use or placed in residential premises situated in France
  • Operating losses (automatic coverage of natural hazards only).

Professional property and casualty insurance covers damage related to natural and technological disasters.

These insurance contracts may be subscribed by any natural person or morality.

Please note

These contracts are always considered, even if they mention a provision to the contrary, to include these guarantees.

Each contract must contain:

  • Sufficiently precise indications identifying the use of the goods covered by this contract.
  • An indication of the area of the professional establishment to which it relates.

Remedies in the event of refusal by the insurer

When an insured person has met refuse by insurance company, because of the high risk of natural disasters to which it is subject, the subscription of a contract of insurance against natural disasters, he may contact the Central Pricing Office. This Office then requires the insurance company concerned to subscribe to the contract requested, which includes this guarantee.

Refer to the Central Pricing Office for a reason related to natural disaster risk insurance

Please note

Where the risk is of particular importance or characteristics, the Central Pricing Office may require the insured to submit to it, under the same conditions, one or more other insurers in order to share the risk among them. This may be the case, for example, if the location of the property gives rise to a specifically high risk of flooding, fire or technological accident.

Damage covered

The effects of disasters natural covered by insurance are direct damage to property due to:

  • theabnormal intensity of a natural agent (rain, waves, earthquakes, etc.), for floods, storms, forest fires, etc.
  • the abnormal sequence of drought events of significant magnitude, for differential ground movements following drought and soil rehydration
  • of subsidence due to underground cavities and material (chalk extraction cavities).

The effects of disasters technological covered by insurance are damage due to accidents:

Warranty always includes the reimbursement of costs the following:

  • Geotechnical studies made necessary prior to the rehabilitation of buildings affected by the effects of a natural disaster
  • Architect's and prime contractor's fees associated with such reclamation, where such reclamation is required.

Differential land movements

Additional safeguards shall apply to damage caused by differential ground movements following drought and soil rehydration.

Where the expert's opinion finds that the building's solidity has been affected or that the condition of the property has made it unsuitable for its use, the compensation payable to the insured person cover work enabling existing disorders to be stopped as a result of the event. Compensation must remain below amount of the value of the insured thing at the time of the disaster.

When the expert does not see these infringements but the damage is likely to develop adversely and to affect the solidity of the frame or to hinder the normal use of the buildings, the warranty also covers this damage.

Excluded Damage

Excluded natural disasters

Some damage related to natural disasters is excluded from the warranty. Damage caused by differential ground movements following drought and soil rehydration are the subject of specific provisions.

General case

Damage resulting frompast or current operation of a mine are excluded natural risk insurance cover.

Differential field movements
Damage which does not affect the strength of the frame and does not hinder the normal use of the building

Damage caused by differential ground movements as a result of drought and soil rehydration which are not liable to affect the strength of the structure or to interfere with normal use of the building are not covered by the warranty.

Example :

Small cracks in non-load-bearing walls.

Buildings attached to buildings

Some other direct property damage are not covered through insurance. These are the ones on the construction annexes parts for professional use. Examples include:

  • Discounts, garages and car parks
  • Terraces
  • Exterior Fence Walls
  • Greenhouses
  • Playgrounds or swimming pools.

FYI  

The architectural elements associated with these constructions and forming an inseparable part of the structures viability, foundation, framework, fence or canopy are however included in the warranty.

Other architectural elements related to these constructions are also excluded from the warranty.

Excluded Technological Disasters

The Technology Risk Guarantee excludes nuclear accidents.

Natural hazards

Some real estate may be excluded from the guarantee against natural disasters.

Damage related to differential ground movements as a result of drought and rehydration of the soil affecting buildings meeting one of the following conditions shall be excluded from the guarantee:

  • Built without building permits, where required
  • If the developer or the owner of the property at the time of the disaster is not not able to justify the submission of the certificate of compliance with risk prevention rules linked to clay land. This condition applies only to buildings for which the building permit was filed after 1er January 2024, for a period of 10 years following completion of the work.

Please note

Damage due to other natural disasters is however included in the warranty for these buildings.

Technology Risks

Some real estate may be excluded from the guarantee against technological disasters. These are the goods built:

  • In areas and sectors defined by an approved Technology Risk Prevention Plan (TPRP), for assets constructed after the publication of that plan
  • In breach of the administrative rules in force at the time of their introduction and intended to prevent damage caused by a technological disaster.

FYI  

Insurance companies may not guarantee the technological risks for such goods only at the time of the initial conclusion or renewal of the contract.

Goods for professional use placed in residential premises (e.g. a business laptop) are not eligible for compensation under the Technology Risk Guarantee.

General

The compensation resulting from the guarantee against natural disasters are subject to deductibles.

FYI  

The deductibles are sums that shall be borne by the insured person following a disaster and who are not reimbursed by the insurer.

The insurer generally compensates the insured to the extent of the restoration costs, excluding these deductibles and within the limits of a possible ceiling of the indemnities.

The upright of allowances shall take into account the following:

  • Risk
  • Size of Insured Capital
  • Use and size of insured property.

The deductibles are mentioned in each document provided by the insurer describing the conditions of compensation. These conditions must be reminded to the insured every year.

For every natural disaster, the amount of that frankness is applied for each contract :

  • Once by land motor vehicle (car, truck, etc.)
  • Once by establishment professional. The professional establishment covers all the professional premises covered by the same contract and located at the same address.
  • The total damage caused for other goods covered.

Warning  

The insured may not take out an insurance contract to cover the part of the risk left to him by the deductible.

Amount of allowances

Goods for professional use (excluding land motor vehicles)

For goods for professional use owned by a company (excluding land motor vehicles), the amount of the exemption shall be equal to 10% of the amount of direct material damage with a minimum amount of €1,140.

For damage caused by differential ground movements due to dry-rehydration of soils, the minimum amount of the exemption shall be €3,050.

However, for those goods, the maximum allowance applicable to direct damage to property is €10,000.

Please note

The insurer may offer a deductible reduction for goods for professional use held by the insured person whose business establishment has a total area greater than:

  • Either 1,500 m², if it is a farm
  • Either 300 m², in other cases.

This shall apply provided that the insured person can demonstrating the implementation of measures to prevent the effects of natural disasters. This reduction in duty-free allowance may apply within the limits of the minimum duty-free allowances (€3,050 for damage caused by differential ground movements ; €1,140 for other damage).

Land motor vehicles

For commercial land motor vehicles, the minimum amount of the relief applicable to direct damage to property shall be €380. The amount of the exemption provided for in the contract for these goods may be higher.

Operating losses

In case of operating loss, the insured person shall bear the costs corresponding to the greater of:

  • Either an interruption or a reduction in the activity of the company for 3 working days
  • Either €1,140.

Where a deductible is provided for in the contract, it shall be applied if it is greater than that amount.

Warranty against damage related to technological disasters covers the full reparationdamage. This repair applies differently depending on the type of property:

  • For real estate, it shall apply unlimited : Repair integral the state of technological disaster must allow the owner of the immovable property to be compensated without any ceiling or deductible.
  • For movable property, it shall apply within the limits of the declared values or of the capital insured under the contract : movable property shall be compensated at its replacement value without application of the aging factors laid down in the contract and without deduction of the contractual exemption.

Please note

Where the extent of the damage to a building makes it impossible to repair it, the full repair must enable the owner to acquire a comparable building in a comparable sector.

Publication of an Order

In order to be compensated, the damage suffered by the insured must be located in a commune and over a period in which a state of natural or technological disaster has been established.

The state of natural disaster or technological disaster is established by inter-ministerial decree. This determines the zones and periods in which the disaster occurred and the nature of the damage resulting from it covered by the insurance covering such damage.

Natural disaster

Municipalities which have suffered a natural disaster must request recognition of a natural disaster within 24 months after the beginning of the natural event giving rise to it. For differential land movements, this 24-month period comes after the last drought event giving rise to the municipal demand.

The decree must be published in the Official Journal in a two-month period from the submission of applications to the prefecture by the mayors of the municipalities affected. This period may exceptionally be extended.

Technological Disaster

The state of technological disaster is noted in the event of an accident occurring making more than 500 dwellings uninhabitable.

The state of technological disaster is noted, in a maximum period of 15 days, by a decree published in the Official Journal of the French Republic.

Reporting requirements differ if it is a natural or technological disaster.

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Natural disaster

The insured person must inform the insurer of any claim liable to activate the guarantee as soon as he becomes aware of it, and not later than 30 days after the publication of the order recognition of the state of natural disaster.

The insurer has a one-month period to inform the insured of the conditions of application of the guarantees provided for in the contract and to order a expertise if the insurer deems it necessary. This period shall begin on receipt of the declaration of disaster or the date of publication of the order establishing the state of natural disaster, where that declaration is made later than the declaration.

Please note

In the case of claims caused by soil dryness and rehydration, the insurer shall also provide the insured with a report of the findings of each visit.

In the event of a dispute between the insured party and the insurer concerning the conclusions of the expert report, the insurer must inform the insured party of its right to have a second opinion drawn up under the conditions laid down in the contract and to be assisted by an expert of its choice.

The insurer has a one-month period to mission the repair company or 21 days to pay the compensation due, as from the receipt of the insured's agreement to the compensation proposal.

Technological Disaster

Any person who has suffered damage as a result of a technological disaster shall establish with his insurance company a description of the damage she suffered.

Compensation is automatic (without further steps to be taken or expert report) when the amount of compensation paid to the victim is less than :

  • €325, in respect of damage to a land motor vehicle.
  • €2,000, for other damage.

Above these thresholds, the insurer or guarantee fund shall require at least one expertise so that the victim is compensated.

The amount of compensation paid shall be indicated in the description.

FYI  

The amount of compensation paid to the victim remains with him: the insurer cannot claim reimbursement.

The provisions differ if it is a natural or technological disaster.

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Natural disaster

General

The insurer makes a offer of compensation or reparation in kind in a one-month period from:

  • Receipt of the estimate transmitted by the insured person in the absence of an expert opinion
  • Or on receipt of the final expert report. The insurer shall forward to the insured the final expert report concerning the claim declared.

One provision on the allowances due under this guarantee must be paid to the insured within 2 months which are:

  • Either the date of return of the estimated condition of the damaged property or losses incurred
  • The date of publication of the order establishing the state of natural disaster, if this occurs after the declaration.

Please note

The insurance contract may provide for more favorable periods for the insured.

Differential land movements

Additional provisions shall apply to damage caused by differential ground movements following drought and soil rehydration.

The insurer may issue a repair company so that it directly repairs the damage. If the insurer does not provide compensation, the compensation received must be used for the effective rehabilitation of the property in accordance with the recommendations of the expert report.

Please note

This obligation to use compensation does not apply if the amount of repair work enabling the effective restoration of the property exceeds the value of the insured thing at the time of the claim.

The insured must transmit to the insurer the invoices proving the completion of the repair work : the insurer may make payment of the balance of the contractual indemnity due conditional on the transmission of invoices.

On receipt of these invoices, the insurer shall have a period of 21 days to pay the balance of compensation due. In the absence of receipt of these invoices, the insurer may request the refund of the advance payment of the compensation already paid.

Warning  

The insured must have initiated the work enabling it to comply with the obligation to use the allowances within a period of 24 months after its agreement on the compensation proposal. The period may be extended by 12 months where the time required for obtaining administrative authorizations or for carrying out studies prior to the commencement of work so requires.

Technological Disaster

The compensation resulting from the guarantee against technological disasters must be awarded to insured persons in a three-month period from:

  • Let the date of submission of the estimate damaged property or losses
  • Let the date of publication, where later, of the order.

Please note

The contract may provide for more favorable periods for the insured.