The French Supreme Court overturns its case law regarding the invalidity “by extension” of exclusion clauses
On 17 September 2026, the French Supreme Court (Cour de cassation) delivered an important judgment overturing its 2021 case law on exclusion clauses in insurance contracts.
Article L. 113-1 of the Insurance Code provides that exclusion clauses must be “formal and limited” in scope, failing which they are unenforceable.
In practice, an exclusion can be presented in two different ways: either a single clause lists all the grounds for exclusion in a single (long) sentence; or each ground for exclusion is set out in a separate sentence, resulting in as many individual provisions as there are grounds for exclusion.
In 2021, the French Supreme Court held that a clause excluding “incapacities and disabilities (whether temporary, permanent, definitive and/or absolute) resulting from: – lower back pain, sciatica, upper back pain, neck pain and other forms of ‘back pain’” was neither formal nor limited, since it referred to “other forms of back pain”, an expression considered insufficiently precise and therefore open to interpretation. As a result, the insurer could not rely on the clause, even where the insured’s condition fell within one of the specific exclusions expressly listed (Cass. Civ 2nd., 17 June 2021, No. 19-24.467).
Accordingly, the presence of a single non-formal and non-limited exclusion rendered the entire exclusion clause ineffective.
Despite strong criticism from both legal scholars and the insurance market, the French Supreme Court reaffirmed its position in its 2021 Annual Report1, stating that an exclusion clause containing non-formal and non-limited exclusions must be rendered null and void ‘in its entirety’. It also reiterated this position in two judgments dated 31 March 2022 (Cass. Civ 2nd., 31 March 2022, No. 19-24.847 and No. 20-18.496).
The Second Civil Chamber of the French Supreme Court was required to revisit this issue in its judgment of 17 September 2026 (No. 25-12.441).
The case concerned a restaurant owner who had suffered business interruption losses as a result of the administrative measures implemented during the Covid-19 pandemic. The insurer declined cover, based on the following exclusion:
“We also cover any loss of gross margin you may suffer as a result of the interruption or reduction in your business activity following […] an administrative closure for food-related professions, excluding situations arising from an epidemic or pandemic and excluding cases of deliberate breach on your part of the French Labour Code and the regulations governing the conditions under which you conduct your business, including those relating to health and safety (…)”.
Relying on the Court’s 2021 case law, the insured argued that the phrase referring to a “deliberate breach of the French Labour Code and the regulations governing the conduct of the business” lacked the requisite precision and therefore rendered the entire exclusion clause ineffective; consequently, the insurer should not have been entitled to rely on the separate exclusion relating to epidemics and pandemics, which was factually applicable to the case.
The French Supreme Court rejected that argument and held that where a clause in a policy contains several distinct exclusions, the formal and limited nature of each exclusion must be assessed individually rather than by reference to the clause as a whole. The Court further stated that “the invalidity of a non-formal exclusion does not render the entire clause ineffective unless that invalidity affects the overall meaning or intelligibility of the clause“.
The French Supreme Court justifies this reversal due to the “doctrinal controversies and divergences in case-law between courts of appeal” arising from the interpretation it had adopted since 2021 of Article L. 113-1 of the Insurance Code.
Significantly, the Court’s reasoning seeks to strike a balance between the interests of insureds, the insurer’s underwriting and pricing assumptions, and the broader principle of risk pooling among policyholders.
According to the Court, the requirement that exclusions be formal and limited must continue to ensure that insureds are able to determine “precisely in which circumstances and under what conditions cover is excluded“. That objective is not undermined merely because another exclusion contained within the same clause is insufficiently precise.
At the same time, the Court emphasises the need to preserve the economic balance of the insurance contract, whose purpose is to provide cover in exchange for the payment of a premium. An insurer should therefore not be deprived of the benefit of a valid exclusion and be required to cover a risk for which no premium has been received merely because another exclusion contained in the same clause fails to satisfy the requirements of Article L. 113-1.
By expressly taking into account the economic structure of insurance contracts and, more broadly, the functioning of the insurance operation itself, the French Supreme Court has adopted an interpretation that accommodates the interests of all stakeholders.
Given both its reasoning and its practical implications, this judgment is likely to settle long-running debates and reduce litigation concerning the validity of exclusion clauses under French insurance law.
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