To avoid paying too much, millions of French take out insurance that provides too little protection. In particular, they forget to pay attention to this line in their contract that allows the company to reduce their compensation.
Present in all insurance contracts, this little line can do a lot of damage to the French wallet. And for good reason: in the event of a disaster: water damage, fire or burglary, it allows insurance companies not to pay full compensation to the insured. Thus, thousands of euros slip through the fingers of all French people every year.
Since insurance is compulsory in France, as well as for a home or a vehicle, policyholders unfortunately try to limit costs. Therefore, millions of people place more emphasis on the cost of insurance, at the expense of the protection it offers.
However, it is crucial to focus on this particular little-known reference in insurance contracts: obsolescence. A paragraph that is not easy to find because it is hidden in about fifty pages that make up the general conditions. We might as well say that “nobody takes the time to read this imposing document,” complains Franck Guénin, an insurance expert at Actex.
However, in these extensive general conditions there is a detail of dilapidation. This term means the loss of value of an object due to its use, age or lack of maintenance. “A piece of furniture, a piece of jewelry, a computer, a household appliance… all goods are subject to obsolescence,” sums up Frank Guénin.
In particular, after a burglary or an accident in someone’s home, insurance will compensate for stolen or damaged goods. Depending on the insurance companies and depending on the type of contract signed, the insured can benefit from different compensation: in the repair value (repair price of an identical object), in use value (replacement cost of the property) or in the market value (sale price of the property immediately before loss or theft) .
However, what is called the obsolescence rate must be subtracted from these values. This percentage reduces the amount of compensation paid by the insurance. For example, if a sofa has a failure rate of 25%, then the insurance will cover only 75% of the cost of the sofa. According to Franck Guénin, “in certain cases, dilapidation can reduce up to 80% of the property’s original value”.
As a rule, cheap insurance contracts will cover the insured less, warns an expert from Actex. In exchange for attractive prices, some companies will apply a high or rapidly increasing rate of obsolescence of goods, without taking into account the actual condition of the item. “We must not forget that the expert authorized by the insurer to assess the deterioration of the property works primarily for the company and therefore has every interest in minimizing compensation to the insured,” warns Franck Guénin.
Conversely, slightly more expensive insurance contracts have the advantage of offering “replacement value compensation, with recoverable obsolescence,” explains Franck Guénin. It is clear that the insurance company will compensate for the stolen or damaged property and subsequently compensate for the obsolescence that it originally took.