Beginning work on a construction project in France? Liability for defects is onerous so make sure you avoid a beating by getting properly insured
Anyone who carries out or invests in construction in France needs to be aware that under France's civil code, they will be liable to the employer or to any purchaser for any defects found in the works. This applies whether or not the builder has been negligent. Liability lasts for 10 years after the handover of the works.

The civil code specifically states that the builder will even be responsible for any damage caused by the quality of the soil affecting the structural integrity of the works. Similarly, the builder will be held responsible if an element of the work has a defect that leaves it unfit for its purpose. The builder can only escape liability if it can prove that the damage came about as the result of an external cause.

To speed up the process of repair, French law has developed the concept of responsabilité solidaire (that is, joint and several liability). This means that any contractor or designer can be held responsible for 100% of the cost of repair, while investigations are carried out into the precise cause of the defect.

As a safeguard, under the code des assurances (the insurance code) anyone who could be liable under the civil code must take out an insurance policy before starting the works to cover their potential liability. (There are, however, some exemptions for companies considered to be "large risks" under European Union insurance laws). Both the benefits of this insurance policy (known as "dommages ouvrage") and the potential liability decennial insurance attaches to the works and passes to all successive owners of the works during the 10-year liability period. It's therefore essential to make sure the insurance is in place before investing in any new property in France.

The insurance code sets out the basic policy wording and the requirements for such policies. The premium is paid by the insured party at the outset so that the insurance policy will continue to run even if the insured party no longer exists (for example, if it goes into liquidation). The cost of this compulsory insurance should be taken into account in the construction project – it usually amounts to about 1.5% of the cost of the construction works. On top of that, the cost of a works control officer (bureau de contrôle) should be considered – their appointment is often required by insurers to minimise the risk of damage during construction and so keeps down the cost of the premiums.

It's therefore crucial for any contractor to check at the outset whether they might be liable under the civil code and whether the related insurance obligation will apply to them. Whereas the contractor's liability under the civil code relates to all "works", the compulsory insurance applies to "building works" only.

The insurance code sets out a detailed procedure for settling claims and it must be followed carefully. It is designed to ensure that insurance awards are paid to the owner of the building within 105 days of the notification of the claim.

The insurer that pays the claim can attempt to recover the amount of the claim from whichever contractor is liable or from their decennial insurance company. Foreign investors contemplating having building works carried out in France should therefore ensure that they get hold of all the relevant detailed documentation required by their dommages ouvrage insurers from all the architects, engineers, contractors and subcontractors working on the project.

For construction projects with a value of at least *4.5m, constructors could alternatively suggest taking out a "police unique par chantier" which is a comprehensive insurance policy for the whole building site. This policy is granted by a single insurer which provides both the decennial liability and the dommages ouvrage insurance for the project. Contractors will be required to contribute to the premium. The advantages of this policy are that there will be less onerous documentation requirements and economies of scale – premiums will be lower than the sum of the premiums of the two separate policies.

It therefore pays to spend some time making sure the right insurance is or will be in place to cover your liability before getting involved in construction projects in France.