The insurance contract can be modified, on the proposal of the insured or the insurer. It must be modified when new circumstances result in aggravating the risk covered by the insurance contract or creating new risks.
Changes to the insurance contract at the request of the insured or the insurer
The insurer or the insured may propose a modification of the contract: for example, new conditions of coverage, removal or addition of exclusions, changes relating to coverage limits or deductibles, re-evaluation of insured amounts.
For example
- in a car insurance contract, the all-accident damage coverage can be removed for a vehicle that is too old;
- in multi-risk home insurance, the insured amounts can be re-evaluated to benefit from a better compensation;
- in a comprehensive home insurance contract, a replacement value clause can be inserted…
The insurer initiates a proposal to modify the insurance contract
When the insurer proposes a modification of the initial insurance contract, he must in all cases obtain the insured’s agreement. This agreement must be materialized by an endorsement to the contract: “Any addition or modification to the original insurance contract must be noted by an endorsement signed by the parties”.
The insured may refuse the proposed changes. The insurer must then maintain the initial conditions of coverage. On the other hand, it may terminate the contract at the next annual deadline.
The insured has initiated a request to modify the insurance contract
The insured must send a proposal to modify his insurance contract to his insurer. A registered letter, although recommended for reasons of proof, is not mandatory.
For all insurance contracts, except for life insurance, the insured may consider his request accepted if the insurer does not refuse it within ten days. In other words, the silence of the insurer is equivalent to acceptance.
Changes to the insurance contract due to changes in the risk
Worsening of the risk or appearance of new risks during the life of the insurance contract
The insured is obliged to declare to his insurer any change in his situation that is likely to “aggravate” the risks covered by his insurance contract or to create new ones. Otherwise, the answers given to the insurer in the risk declaration form when the contract was concluded would become inaccurate or null and void.
This is the case, for example, for :
- a motorist who wants to use his vehicle for professional purposes when he is only insured for private travel;
- a craftsman whose premises adjacent to his own, empty at the time of subscription, becomes a warehouse for storing dangerous products.
The insured has 15 days to make a declaration, from the moment he/she becomes aware of a change likely to modify the insured risk.
Following this compulsory declaration, the insurer must tell the insured, within ten days, whether it wishes to cancel the insurance contract or maintain the cover with an increase in the premium.
This obligation does not apply to life insurance
If the insurer decides to cancel the insurance contract
When the change is related to the evolution of the risk, the insurer has the possibility to cancel the contract. The cancellation takes place ten days after the insurer has informed the insured of its intention to cancel the contract (notification).
If the insurer proposes a modification of the contract with an increase in the premium,
there are two possible situations:
- either the insured does not follow the insurer’s proposal or expressly refuses the new amount within thirty days of the proposal; the insurer may terminate the insurance contract at the end of this period;
- or the insured accepts the new conditions and a rider or a new contract is issued.
New proposal without increase of the premium
When the change in risk appears to be minor in relation to the underwriting criteria used at the time of underwriting, the insurer may record the new situation in an endorsement without increasing the premium.
New insurance contract
Similarly, a new contract can be drawn up with new conditions (amounts of cover, deductibles, rates, etc.) to take better account of changes in the risk.
Decrease in risk
Even when the new situation does not constitute an increase in risk, it may be in the insured’s interest to declare it to his insurer.
Indeed, a change of situation can lead to a reduction of the premium. For example, when the guarantees provided for in the contract are no longer necessary.
If the insurer refuses to reduce the premium in proportion to the reduction in risk, the insured may terminate the insurance contract. Termination takes effect thirty days after the insured has given notice of termination. The insurer must then reimburse the insured for the portion of the premium corresponding to the period during which the risk did not occur.
The provisions of the Insurance Code are not applicable to life insurance or health insurance when the insured’s state of health changes.
Changes to the insurance contract imposed by law
New guarantees are sometimes imposed by law. In this case, the insured cannot refuse them.
This was the case in 1982 when coverage against natural disasters became mandatory: policyholders had to accept the addition of this coverage and an increase in premium. Similarly, since the law of September 9, 1986, all property insurance contracts automatically include coverage for material damage resulting from acts of terrorism and attacks.