As most people know, the law in France differs considerably on certain points to that of the UK or USA, and in France the law with regard to insurance will definitely effect you whether you are buying a house, building property, or intending to drive in France.
William Stoker, a British manager for AXA Insurance in Nîmes, who has lived in the area for many years. Here he gives French Entrée Languedoc a brief guide to things that people need to be aware of before embarking on a move or purchase in France, and explains how the English speaking insurance service he offers through AXA is able to help British or American buyers around these difficulties.
1. You need to have House Insurance in place before you complete on your Property purchase:
When buying a property in France it is a requirement for you to have arranged house insurance before completion of the sale. The Notaire will ask for proof of insurance.
This can pose some difficulties for foreign buyers, as most insurers in France will want to you to have signed their contract and to have taken payment before releasing the necessary documents.
AXA can offer help by underwriting risks before premiums are paid, and can sort out insurance documentation over the telephone with buyers abroad in English, explaining all the ramifications and issues involved.
2. Bringing your UK or US registered car to France can be a complicated, bureaucratic and problematic process and getting it insured is often difficult.
If you want to bring a non-French registered car to France you need to reregister the vehicle within three months by law. This requires:
– French Contrôle Technique of under 6 months (equivalent of an MOT)
– French homologation papers. Confirmation from the manufacturer of the technical specifications for that particular model.
– The original registration document
Most French Insurance firms are reluctant to insure UK registered vehicles, and UK insurance companies will not insure vehicles that are permanently stationed abroad.
AXA will insure UK registered cars provided that they are going to be registered within the three-month period (or thereabouts). In addition, they will help you with the process by providing the document from the Prefecture containing list of required documents, with sorting out the file, and translate necessary documents and advise you through the process.
3. The French “no-claims” system :
An experienced driver over 30 with a full UK no claims bonus of five years in the UK would probably pay significantly less in premiums than in France. The French system only gives a full no claims bonus to drivers who can prove that they have not had any claims for accidents caused by them during the previous 13 years.
This is problematic for British drivers, and others coming from abroad, because most insurance companies will not give guarantees going back 13 years. It is more normal for insurance companies in the UK to confirm 7 or 8 years no claims.
AXA can help here because they understand that the average British or American driver is not likely to have had the same level of bonus and they can offer the maximum French bonus in certain situations.
AXA policies are based on the driving record of the main driver, named in the policy-documents. However, all occasional drivers of the vehicle are automatically insured at no additional cost. The only limit is with regard to drivers who have only recently obtained their licence (within 3 years), and who are not personally insured for another vehicle; additional excess charges would be applied should such a driver cause an accident. This exception does not apply to the spouse or employee of the main, named driver.
4. In France it is advisable to have Public Liability Insurance or “Responsibilité Civile”:
In France law, an individual is responsible for any damage caused by persons, goods and chattels that he controls or owns. Therefore, if your dog bites someone, or your horse breaks a fence, a roof tile falls on someone’s car, or if your child causes personal injury to another pupil school, you are potentially liable. Indeed schools in France require parents to show proof of “Responsibilité Civile” at the start of each school year. Certain schools even try to coerce parents into take out “Assurance Scolaire” in addition, which includes personal-injury cover for the child, although this is not obligatory. Public liability insurance is included in AXA household insurance-policies, and protects the policy-holder and his family abiding at the insured adress should they be deemed liable for damage or harm to another person’s property or person. This cover is essential in an increasingly litigious environment
Certain breeds of dog have to be covered for public liability insurance and are classified in France according to their level of “dangerousness”. They include dobermans and rottweilers You also need insurance to go hunting.
AXA can advise you about the appropriate level of cover required.
5. “Dommages Ouvrages” insurance for new builds or renovation work, and why you might need it:
“Dommages Ouvrages” is an insurance policy that the owner of a newly built property or a renovation project is expected to take out. It costs between 2 – 8 % of the overall construction budget. The guarantee lasts for 10 years, and insures you and any future owner against major structural damage resulting from poorly planned or executed building-work. Theoretically, this type of cover is a legal obligation ; in practise, there are no sanctions for private individuals who do not insure. You should however be aware that in the event of resale of the property within the 10 year period, the notaire representing the purchaser will require proof of cover, and will inform you that the purchaser has a right to claim from the vendor for any damage that would normally have been covered by the guarantee. If you are not able to provide proof of cover, this could prevent the sale going through, or at least become a bargaining point for the purchaser.
So what is “Dommage Ouvrage” exactly? It is in fact insurance against builders failing to pay up in the face of a claim for major structural faults. Every builder is required by law to take out insurance “Décennale” giving a guarantee for ten years starting one year after completion. “Dommage Ouvrage” was introduced because of the time it was taking for builders’ insurance companies to settle claims and resolve arguments about responsibility. Homeowners were being left for years without any compensation to pay for expensive and vital structural repairs to their property. “Dommage Ouvrages” pays up in the meantime.
In the Midi, building practices are not always as reliable, legal or honest as they should be, and a number of companies do operate without the insurance they are obliged by law to have.
AXA can advise clients in English about the implications and ramifications of this issue and offer advice around the best way to reduce the costs of it.
6. Inheritance tax law in France is extremely complex, and rates of tax, after various rebates are taken into account, range up to a maximum of 60% for beneficiaries with no family connection to the deceased.
French inheritance law is extremely protective of the children of the deceased, who have an automatic right to a certain proportion of the estate; 2 children would have a right to 2/3 of the value of the estate, for example. Whilst some progress has been made towards giving greater rights to the surviving spouse, it is extremely important, notably when purchasing property in France, that advice be taken on the different means available to protect his, or her interests.
Investment income and capital gains.
As with inheritance tax, the fiscal environment with regard to savings and investments is extremely complex, with relatively high rates payable to the revenue services. But a large number of “niche” vehicles have been created in response to legislation aimed at promoting medium to long-term investment.
AXA can advise on French financial products that offer significant tax exemptions and benefits in relation to investment portfolios and inheritance tax.
“Assurance Vie”, for example, is a Life Insurance scheme which works as an investment vehicle and which particularly benefits non-French residents with regard to tax exemptions.
Through Assurance Vie one can invest in a huge range of different managed funds and escape capital gains tax as long as no withdrawal is made in the first eight years. Even in the event of withdrawals during that initial period, tax rates are greatly reduced.
Assurance Vies also allows for important sums to be transmitted to beneficiaries in the event of death, outside of the deceased’s estate for inheritance-tax purposes.
To find out more about these investment vehicles and tax exemptions, contact William Stoker at AXA ASSURANCE, Nîmes.
William Stoker is available to explain in more detail how the French system works and will give you quotes over the telephone. Visit www.stoker-axa-assurances.fr or contact William using the below details:
49 Bis av. Jean Jaurès – BP 37133
Tel: 0033 (0) 4 66 29 63 52
FAX: 0033 (0) 4 66 29 63 24