Insurance: Does an Invalid Exclusion Clause Automatically Invalidate the Entire Clause?

French Court of Cassation, Second Civil Chamber, 17 September 2026, Appeal No. 25-12.441

Can my insurer refuse to compensate me by relying on an exclusion clause in my insurance policy?

In a judgment dated 17 September 2026, published in the Bulletin, the French Court of Cassation reversed its previous case law. Each exclusion must now be assessed individually: the invalidity of one exclusion no longer automatically invalidates the entire clause, unless that defect affects the interpretation of the clause as a whole.

This decision is particularly relevant to policyholders challenging an insurer’s refusal to provide coverage.

1. The facts: a restaurant owner challenges its insurer’s refusal to provide coverage

A company operating a brasserie and restaurant had taken out a commercial insurance policy with a French insurance company. The policy included cover for business interruption losses.

Following the government measures introduced in March 2020 to combat the spread of Covid-19, the establishment was forced to close to the public. The insured company notified its insurer of the loss and sought compensation for its business interruption losses.

The insurer refused to provide coverage, relying on an exclusion clause in the policy.

The clause provided for two separate exclusions:

• circumstances arising in an “epidemic or pandemic context”;

• circumstances resulting from a “deliberate breach of the Labour Code and the regulations governing the conditions under which the profession is carried out, including regulations relating to the hygiene and safety of persons”.

The insured company challenged the refusal of coverage, arguing in particular that the exclusion clause did not satisfy the applicable legal requirements.

The Paris Court of Appeal held that the exclusion relating to an epidemic or pandemic context was valid and enforceable against the policyholder. The latter appealed to the French Court of Cassation.

2. The legal principle: an exclusion must be clear and limited in scope

Article L. 113-1 of the French Insurance Code provides that losses and damage caused by fortuitous events or by the fault of the insured are covered by the insurer, unless they fall within a formal and limited exclusion contained in the insurance policy.

This requirement obliges insurers to draft exclusion clauses with sufficient precision to enable policyholders to understand the circumstances in which coverage will not apply.

An exclusion may fail to meet the requirement of formality where it relies on imprecise criteria or requires interpretation to determine its scope.

In practice, an exclusion clause that does not comply with Article L. 113-1 of the French Insurance Code may be held unenforceable against the policyholder.

The difficulty arises when a single clause contains several exclusions: should only the invalid exclusion be disregarded, or should the entire clause be set aside?

3. A change in case law: each exclusion must now be assessed separately

Previously, the French Court of Cassation held that an exclusion clause containing several exclusions, some of which were not sufficiently clear and precise, had to be disregarded in its entirety, even where the particular exclusion relied upon by the insurer was, considered individually, sufficiently precise.

In its judgment of 17 September 2026, the Court of Cassation changed its approach.

It now holds that, where a contractual clause lists several grounds for excluding coverage, the formal nature of each exclusion must be assessed individually rather than by reference to all the exclusions contained in the clause.

The invalidity of one exclusion therefore no longer automatically invalidates the entire clause, unless the defect affects the interpretation of the clause as a whole.

In explaining this change, the Court of Cassation emphasised that the clarity requirement is intended to ensure that policyholders can understand the precise scope of their insurance coverage. It considered that this objective can be achieved by setting aside only those exclusions that fail to meet the legal requirements, while maintaining those that are sufficiently clear and precise.

The decision also seeks to preserve the economic balance of the insurance contract by avoiding the imposition of coverage for a risk that the insurer did not intend to insure, where the relevant exclusion is valid.

4. Application to the case: the pandemic-related exclusion remains valid

In this case, the disputed clause contained two separate exclusions.

The Court of Cassation found that the exclusion relating to an “epidemic or pandemic context” was unambiguous and did not require interpretation.

It therefore held that the Court of Appeal had correctly considered this exclusion to be formal and limited in scope.

The presence of another exclusion within the same clause that might not satisfy the legal requirements was not sufficient to invalidate the exclusion relied upon by the insurer.

The Court of Cassation consequently dismissed the appeal.

The insurer’s refusal to provide coverage therefore remained effective in this case.

5. What are the implications for policyholders?

This decision significantly changes the way exclusion clauses must be challenged in insurance disputes.

The presence of an invalid exclusion is no longer sufficient to invalidate all the other exclusions contained in the same clause.

When an insurer refuses coverage, it remains essential to examine the precise wording of the exclusion relied upon and determine whether it is sufficiently clear and limited in scope under Article L. 113-1 of the French Insurance Code.

It is also necessary to establish whether the various exclusions in the policy are genuinely distinct and whether the defect affecting one exclusion undermines the interpretation of the clause as a whole.

In practice, this analysis is particularly important in disputes involving home insurance claims, water damage, property damage and business interruption losses, where insurers frequently rely on contractual exclusions to refuse compensation.

An insurer’s refusal to provide coverage should therefore not be accepted without examining the terms of the policy. However, following this judgment, challenges to exclusion clauses must be carefully targeted and take account of the precise scope of the change in case law introduced by the French Court of Cassation.

Read the judgment

Has your insurer refused to compensate you?

An insurance company may rely on a contractual exclusion to refuse to cover a loss. However, the validity and enforceability of that exclusion must be assessed in light of the policy wording and the applicable legal requirements.

As a lawyer admitted to the Nice Bar, I assist policyholders in disputes with insurance companies, particularly in matters involving home insurance claims, water damage and property damage.

If your insurer has refused to compensate you, a review of your policy and the reasons given for the refusal may help identify the legal remedies available to you. Contact me.