The compensation may be reduced in the event of inaccurate indication of the capital to be insured

Case study

The owner of a recording studio located in his home has drawn up a specific contract to guarantee his instruments and musical equipment, opting for a guarantee “in case of damage caused by water” of up to 50,000 euros. This amount corresponds to the value of the guaranteed goods, specified in the contract.

Water damage damaged the insured property. The owner then requested implementation of the “water damage” guarantee from his insurance company. The latter commissioned an expert company to observe and assess the damage suffered.

During his visit, the expert noted that the declared capital of 50,000 euros was significantly lower than the actual capital, estimated at 70,450 euros excluding tax. He calculated the operating loss caused by the water damage at 52,000 euros.

The insurance company then limited the compensation amount to 36,770 euros according to the proportional capital rule set out in the contract.

The insured disputed the amount of the compensation. He believed that he was entitled to claim the contractual amount of 50,000 euros.

The insurance company must be able to assess exactly the risk it is offering to guarantee before it is accepted. To this end, the insured must answer correctly the questions asked when concluding the contract, in particular the amount of the capital to be insured.

Many policyholders do not seem to be sufficiently aware of the importance of the accuracy of their statement when entering into their contract. However, this declaration step is crucial because the insurance company can reduce the compensation amount if the insured minimizes his capital.

According to article L.121-5 of the insurance law: “If it follows from estimation that the value of the insured item exceeds the guaranteed sum on the day of loss, the insured is considered to remain his own insurer. for the deductible, and therefore bears a proportionate share of the damage, unless otherwise agreed”.

This legal provision allows the insurance company to apply the proportional capital rule when, after a claim, he finds that the value of the stated capital was lower than the real value of the capital to be insured. The insurance company then calculates the compensation to the insured after applying the proportional capital rule by proceeding as follows: size of the damage x (insurance value/actual value). In this case, at the end of this calculation, the insured obtained a compensation of 36,770 euros. For the rest of his losses, the insured being regarded as his own insurance company, he therefore received nothing.

It is therefore imperative to state the capital amount to be insured correctly.

Leave a Comment