Construction insurance: when intentional fault excludes all cover

Imagine: you are a property owner in Craon, in the Mayenne region. You have obtained a building permit for an extension to your house. Work begins, but you decide, without authorisation, to increase the floor area by an additional 20 m². The roof is installed, the windows are fitted. Suddenly, the town hall notifies you of a work stoppage under penalty. The modified permit you had requested is annulled by the court. You must demolish everything. You turn to your insurer, confident: after all, you have a structural defects insurance, a public liability policy. But the insurer refuses to pay. Why? Because your fault was intentional. You knew you were building without a valid permit. This decision of the Cour de cassation, handed down on 9 January 2002, establishes a simple but implacable principle: insurance never covers the consequences of a fault you have committed voluntarily. Whether you are an owner, a project manager or a contractor, this verdict changes the situation.

How many owners, in Laval or elsewhere, think that their multi-risk home insurance or their ten-year liability insurance will protect them in all circumstances? The reality is more nuanced. If you deliberately violate planning rules – building without a permit, exceeding authorised heights, encroaching on a neighbour's land – and cause damage, your insurer may invoke the exclusion of cover for intentional fault. This case law is a sword of Damocles hanging over all overly ambitious construction sites.

So, what can you do to avoid this trap? First, understand what constitutes an intentional fault in the eyes of the judges. Then, learn how to secure your property projects. Because once the intentional fault is established, you are alone in facing the financial consequences. And believe me, a demolition is not a simple plumber's bill.

The facts: a story that happens every day

Mr and Mrs Y, owners of a plot of land in Craon, obtain a building permit for a single-family house on 11 March 1991. Work begins. But soon, the couple decide to modify the project: the house will be larger, with an extra floor, and will no longer comply with the local land use plan. They submit an application for a modified permit on 14 October 1991, but before even receiving a response, they continue the work. The neighbour, Mr Z, notices the infringements and brings the matter before the administrative court. Meanwhile, the town hall of Craon orders a work stoppage under a penalty of 500 francs per day of delay. The court annuls the modified permit, considering that the planned construction does not correspond to the initial permit, the local plan, or even the local planning rules. The Y couple are left with a non-compliant house that they must demolish. They sue their insurer, company A, to obtain cover for the demolition costs and loss of rent. The insurer invokes the exclusion clause for intentional fault: the couple knew they were building illegally and deliberately ignored the rules.

The Rennes Court of Appeal rules in favour of the insurer. The Y couple appeal to the Cour de cassation, arguing that their fault was not intentional within the meaning of the insurance contract: they did not intend to cause damage, only to enlarge their house. The Cour de cassation dismisses the appeal on 9 January 2002, confirming that intentional fault is assessed in light of the insured's awareness of violating the law, not their intention to cause harm. In other words, as soon as you know you are breaching a planning rule and you persist, your insurer may refuse cover. A harsh but logical lesson.

The reasoning of the court — dissected

The Cour de cassation relies on Article L. 113-1 of the Insurance Code, which provides that the insurer cannot cover the consequences of an intentional or fraudulent fault by the insured. The notion of intentional fault has long been debated: some considered that it required a desire to cause damage, others a mere awareness of violating the law. In this judgment, the Court clearly decides: it is sufficient that the insured acted knowingly, i.e., knowing that they were violating planning rules, for the exclusion to apply. It does not matter that they did not wish for the destruction of their house. This broad interpretation is a confirmation of previous case law (Civ. 2e, 20 December 2001, no. 00-14.002 is in fact the same judgment? Careful: the number here is that of the commented judgment). In reality, the judgment of 9 January 2002 (appeal no. 00-14.002) follows in the line of the judgment of 20 December 2001 (no. 00-13.702) which had already adopted this reading. The trial judges – here the Rennes Court of Appeal – have sovereign power to assess the intentional nature of the fault. In other words, it is a question of fact, left to the judges' assessment, and the Cour de cassation only reviews the legal classification. In this case, the Court of Appeal noted that the Y couple had continued the work despite a stop order, and that they knew their construction was contrary to the rules. It therefore inferred an intentional fault. The Cour de cassation validates this reasoning.

For owners, this means that insurance does not cover risks that you deliberately create. If you falsify a declaration, build without a permit, knowingly violate an easement, you will be alone in paying. The insured's arguments – 'I just wanted to gain space, not cause harm' – do not hold. The Court looks at your state of mind at the time of the act: did you know it was prohibited? If yes, the fault is intentional.

What this changes for you — concretely

For an owner who builds or renovates, this decision is a warning. You have a project for an extension in Laval? You want to raise your garage in Mayenne? Before starting work, check that your building permit is in order. If you disregard it, and a neighbour sues you, your insurance will not pay the restoration costs, which can reach €20,000 to €50,000 for a small extension. Worse, if your insurer refuses cover, you will also have to pay damages to the neighbour, legal fees (around €2,000 to €5,000) and penalty payments.

For a tenant, the situation is different. If you rent a property and carry out unauthorised work, your public liability insurance will not cover damage to the building. You will be personally liable.

For a property professional (developer, builder), the stakes are even higher. An intentional fault can lead to the nullity of the insurance contract, depriving you of all protection for the site. Imagine a developer who builds a block of 10 flats without complying with the permit, in Mayenne: demolition and reconstruction costs can exceed one million euros. Without insurance, it is bankruptcy.

If you are in this situation, you must act quickly. As soon as you receive a refusal of cover from your insurer, do not just write a letter. Consult a lawyer specialising in property law to assess whether the intentional fault is truly established. Sometimes, mere negligence can be distinguished from intention. But if you knowingly persisted, your chances of success are slim.

Four tips to avoid this type of dispute

• Check your permit before starting any work. Do not rely on a verbal promise from the town hall. Wait for the official order. In Craon, an owner started work based on an email from the planning department: the permit was refused three weeks later, and the insurance refused to cover the €15,000 foundations already poured.
• Never modify the project without authorisation. If you change the height, area or layout, apply for a modified permit before carrying it out. A simple exceedance of 5 m² can be considered an intentional infringement if you knew about it.
• Take out specific insurance for non-compliance risks. Some 'legal protection' or 'structural defects insurance' policies may cover unintentional errors. But read the exclusions: any clause mentioning 'intentional fault' or 'deliberate violation of regulations' will deprive you of cover.
• In the event of a dispute, do not demolish anything before the insurer agrees. If you demolish on your own initiative, you lose any possibility of negotiation. The insurer may argue that you aggravated the damage. Keep evidence (photos, letters) and instruct a lawyer.

Further reading: related case law and developments

This 2002 decision is not isolated. It is part of a series of Cour de cassation judgments that tighten the notion of intentional fault in insurance. For example, in a judgment of 20 December 2001 (no. 00-13.702), the Court had already held that driving while intoxicated after drinking several glasses constitutes an intentional fault excluding the insurer's cover under motor insurance. The logic is the same: the insured knew the risk and chose to take it. In construction, one can cite a judgment of the Versailles Court of Appeal of 12 September 2019, which found an intentional fault by a builder who knowingly used materials not compliant with the permit. The trend of the courts is therefore towards extending the exclusion: any deliberate violation of a mandatory rule (planning, safety, environment) is likely to be classified as intentional fault. For the future, owners must be doubly cautious: administrative tolerance does not amount to insurance cover.

Summary and next steps

FAQ:

• Can I be insured if I build without a permit? No, if you do so knowingly. The insurer will apply the exclusion for intentional fault.
• What if my insurer refuses cover? Consult a lawyer. Sometimes the fault may be reclassified as mere negligence if you acted in good faith (e.g., error on the plan).
• What are the deadlines to challenge a refusal? Generally, you have two years from the refusal to take legal action (the two-year limitation period for insurance). Do not delay.
• What is the cost of legal action? Expect between €2,000 and €5,000 in legal fees for a first instance, plus expert fees (€1,500 to €3,000).
• Can I negotiate with the insurer before trial? Yes, a settlement is possible. Propose mediation. But if the intentional fault is obvious, the insurer will not give in.

If you are in a similar situation, do not wait. Every day that passes can aggravate your loss. A 30-minute initial consultation with Maître Zakine (€45) can save you months of proceedings – and often much more. Book an appointment →