Understanding insurance terms

Insurance contracts are governed by French law. It is therefore very important to understand each clause cited in the contract and the implications it may have for the beneficiary. The clauses in the contract are designed to be a guarantee and to protect not only the insured, but also the insurer in the event of a claim. Nevertheless, it is essential that you understand the clauses mentioned in the contract in order to make the most of your insurance.

The clause of an insurance: definition

A clause, also called an insurance guarantee clause, is a written condition inserted in a contract which defines the rights and obligations of the parties bound by the contract in the event of a claim. It defines the conditions of the agreement between the insurer and the insured and allows both parties to know what they can expect in the event of a claim. It can be used to explain in detail the scope of the contract itself and how the terms of the insurance will be guaranteed. A clause is often a guarantee of the contract to avoid misinterpretation from both parties.

The impacts of the clauses on your insurance

When you take out insurance, it is your right to read every clause of the contract. Each clause can have a significant impact on your coverage (especially on beneficiaries) and your financial responsibility. For example, certain clauses in the contract may limit coverage or specify exclusions that are not covered by the insurer. It is important to note that the clauses are drafted by the insurer and that any ambiguity, omission or inaccuracy will be to its advantage. If you do not understand a clause, ask your broker or a legal adviser to explain it more clearly, or check the code in the Court of Cassation.

Types of clauses

There are different types of clauses in an insurance contract. The main types of clauses are:

Disclaimer

The exclusion clause allows the insurer to limit their obligations to the insured by specifying what is not covered by the insurance. The exclusion clause erases certain risks among those which are generally covered. The exclusion clause may vary from policy to policy and may include activities such as extreme sports, damage or drug use. It is important to understand that if the risk is explicitly excluded in the policy, the insurer is not obliged to cover it.

Franchise clause

The deductible clause defines the amount that the insured must pay for each claim and can be limited by type of claim. They are usually expressed as a lump sum in Euros and may vary from policy to policy. Indeed, the deductible clause is considered as a means of keeping the cost of insurance at a reasonable level, because it obliges the insured to bear part of the cost of the claim. Therefore, the insurer will only pay the balance after deducting the deductible.

The types of insurance governed by the clauses

It should be noted that all the clauses are valid for all types of insurance:

• Life and death insurance;
• Car Insurance ;
• Home Insurance ;
• Liability insurance.

The validity of the insured's contract is therefore guaranteed thanks to the clause mentioned in the contract linking him to the insurance.

The importance of understanding insurance terms

Thus, the clauses define the right and the obligation of the insured and the insurance, which are bound by a contract. Understanding these clauses is therefore essential to be able to benefit from your right of cover..

It is very important to carefully read the clauses in the contract to be sure that you know the limits of the insurance and the exclusions of your policy with the risks which are not included in your contracts.

If you're worried about how a clause might affect your coverage, don't hesitate to discuss your concerns with your broker or legal counsel.

Compliance with laws

All insurance policies must comply with applicable laws. Therefore, certain clauses may be added to comply with legal requirements, according to the Court of Cassation. Your insurer must mention clear information in the contract how the contract complies with applicable laws and regulations. If you don't understand how a clause relates to a particular law, ask your broker or legal counsel to explain it more clearly.

The differences between the insurance code and the insurance clauses

It is imperative that the insurance code determines:

• The notice period for contracts;
• The contract period; 
• The rules and conditions for terminating contracts; 
• Beneficiary compensation.

Despite the insurance code, the insurer can always add additional clauses, depending on the type of contract, in addition to the property or the beneficiary to be covered. The purpose of the insurance code is to protect the insured and the insurer against the abuse of clauses in certain insurance policies.

Understanding the clauses of the different insurance contracts is important for guaranteed insurance. However, it is also essential to know the code and the law in the Court of Cassation of insurance to ensure that you are well covered in the event of a claim.