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The case: a limitation question
In the late 1990s, a couple took out a mortgage credit requiring an outstanding-balance (mortgage life) insurance covering 100% on the husband’s life, arranged through the lending bank. In 2004, again through the bank, the wife signed an insurance proposal covering 50% of the credit for its remaining term, while the husband sought to reduce his own coverage to 50%. A few days later, the insurer asked the wife to complete the medical form she had returned incomplete. She did so, but no insurance policy document was ultimately signed. Ten years later, the wife died. The bank informed her heirs that the mortgage credit was not covered by any outstanding-balance insurance and sought repayment of the credit from the heirs, jointly with the husband.
The legal arguments: Article 57 of the Insurance Act and the bank’s duty to inform and advise
The wife’s heirs and the husband sued the insurer and the bank as insurance intermediary. Against the insurer, they invoked Article 57 of the Insurance Act of 4 April 2014, under which, if within thirty days of receiving the proposal the insurer has not notified the applicant of an offer, of the subordination of cover to an enquiry, or of a refusal, it is obliged to conclude the contract on pain of damages. Against the bank, they invoked the banker’s liability, claiming a loss equal to the amount they had to repay, based on a breach of the duty to inform and advise: the bank had led them to believe cover existed and had not checked its existence through the various changes to the credit since 2004.
The decision: when does the limitation period start?
The insurer and the bank invoked the three-year limitation of Article 88 of the Insurance Act. The court agreed as to the insurer, but not the bank: against the bank, the action does not derive from the insurance contract, so the ordinary rules of non-contractual liability apply (Article 2262bis, § 1 of the Civil Code). There, the period runs from the moment the victim became aware of the loss and of its author.
The court rejected the heirs’ argument that the loss appeared only at the death and the news that no insurance covered it. It stressed that, even if the wife had maintained her interest in taking out the insurance, neither she nor her husband ever worried about not receiving a policy to sign, nor about not receiving premium demands, nor about not paying premiums or receiving the related tax certificates, for nearly ten years before her death, while the husband did receive such certificates. Their attention should have been drawn spontaneously by these elements, and from 2010 at the latest they could have had the information dispelling any doubt as to the loss and its author. A liability action against the bank brought after 2015, as here, is therefore time-barred.
To engage a bank’s or intermediary’s liability, the client must be diligent and active, and keep proof
The client must not stay passive and merely sign documents. As a prudent and diligent person, the client must remain vigilant, ask questions of the professional, particularly where there is concern or misunderstanding, and, crucially, keep sufficient proof of those questions and of his actions towards the professional.
This article is a translation. Only the French version is authoritative. It is provided for information purposes and does not constitute legal advice.
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