Décennale Cover Cap: Project Cost, Not Just Your Contract

A cap on France's mandatory ten-year structural liability cover — garantie décennale — is assessed against the total cost of the whole construction project, not just the work package awarded to the insured contractor. That is what the French Supreme Court for civil matters confirmed on 2 July 2026: if that cap is exceeded without a written extension of cover, the insurer owes nothing, even if the contractor's own package stays below the threshold. This article describes French law.

The essentials

• The Cour de cassation (Cass. 3e civ., 2 July 2026, n° 24-12.598) ruled that a cost cap stipulated in a construction liability policy is assessed against the whole real-estate operation, not just the market awarded to the policyholder.
• In the case at hand, the contractual cap was set at €15,000,000. The total cost of the project reached €31,650,000 excluding tax, and no extension of cover had been requested or obtained.
• A clause capping cover at project cost delimits the insured risk; it is not an exclusion clause, and so escapes the scrutiny applied to clauses restricting mandatory insurance.
• Exceeding the cap without an extension results in a total absence of cover, not underinsurance: the proportional-reduction rule of article L. 121-5 of the French Insurance Code does not apply.
• This ruling concerns cover for works or activities outside the scope of France's mandatory construction insurance obligation (article L. 241-1 of the Insurance Code); for mandatory décennale cover itself, no clause may reduce the minimum content set by the standard policy wording (article L. 243-8).

What exactly did the Court rule on 2 July 2026?

The Cour de cassation upheld an insurer's refusal to cover a landscape project manager (maître d'œuvre) whose ten-year liability had been established after defects appeared on a mixed-development zone (zone d'aménagement concerté). The policy rider capped cover at operations whose cost did not exceed €15,000,000, with the possibility of an extension by express agreement of the insurer.

The total cost of the project reached €31,650,000 excluding tax. The policyholder argued that the cap should be assessed only against the work under its own contract, not the real-estate operation as a whole. The Toulouse Court of Appeal ruled otherwise, and the Cour de cassation confirmed it: the lower court "sovereignly held that this sum referred to the cost of the real-estate operation as a whole, and not the amount of the contract awarded to the insured party or of the works for which it provided project management" (Cass. 3e civ., 2 July 2026, n° 24-12.598). Splitting an operation into separate lots awarded to different contractors therefore does not shrink the basis on which the contractual cap is assessed.

Why is a cost-cap clause not a coverage exclusion?

A clause capping cover at the cost of the operation positively defines the perimeter of the insured risk; it does not, after the fact, restrict cover that was already granted. This distinction — delimiting the risk versus excluding cover — governs the whole ruling.

French construction insurance law separates two kinds of clauses. On one side, clauses defining the activity, technical process, or amount of the operation covered: the insurer remains free to delimit what it agrees to insure. The Cour de cassation, for instance, upheld a clause limiting cover to a specifically named loft-conversion technique, holding that resorting to a different technique "was not merely a variant in carrying out the declared activity, but that activity itself" (Cass. 3e civ., 30 January 2019, n° 17-31.121, published in the Bulletin). On the other side, clauses that reduce the minimum content of mandatory legal cover are deemed unwritten: the Cour de cassation struck down a clause limiting a swimming pool's décennale cover to damage affecting its structure alone, when the defects made the pool unfit for its purpose (Cass. 3e civ., 4 February 2016, n° 14-29.790, published in the Bulletin).

The decisive point in the 2 July 2026 ruling is that the work at issue fell outside the scope of France's mandatory construction insurance obligation set out in article L. 241-1 of the Insurance Code. Outside that scope, contractual freedom applies in full: the insurer may cap its cover at the cost of the operation, and that cap takes full effect.

What happens if the cap is exceeded without an extension of cover?

The insurer owes nothing, and no proportional reduction applies. The Cour de cassation expressly ruled out the proportional-capital rule: the lower court, "having sovereignly held that the work was not subject to the insurance obligation and that the policy taken out covered the insured only for projects whose total cost did not exceed a certain amount, […] correctly concluded, having found that this amount had been exceeded without any specific cover having been obtained, that the insurer did not owe cover, without there being any need to apply the proportional-capital rule" (Cass. 3e civ., 2 July 2026, n° 24-12.598).

This distinction carries a direct practical consequence. The proportional rule under article L. 121-5 of the Insurance Code presumes that the risk falls within the scope of the policy, but that its value exceeds the sum insured: the policyholder then bears a share of the loss in proportion to the shortfall. That mechanism does not apply here: the risk was never covered at all, and exceeding the cap without an extension places the operation outside the insured scope entirely.

Situation	Applicable regime	Consequence for the contractor
Project cost ≤ contractual cap	Cover fully granted	Normal indemnification on a decennial claim
Project cost > cap, extension obtained in writing	Cover extended to the agreed amount	Indemnification within the limit of the extension
Project cost > cap, no extension obtained	No cover at all	No indemnification; proportional rule does not apply
Incomplete risk declaration on a covered project	Underinsurance	Indemnification reduced pro rata (art. L. 113-9)

Does this rule apply to a building's mandatory décennale cover?

Not in the same terms. For works subject to the mandatory construction insurance obligation, no clause may reduce the minimum guarantee content set by the standard regulatory policy wording (article A. 243-1 of the Insurance Code), pursuant to article L. 243-8. A clause with that effect is deemed unwritten, whatever its wording.

The 2 July 2026 ruling concerns a different situation: a work outside the scope of the mandatory obligation (a landscape project-management assignment on a development operation), covered under an optional, décennale-style policy. The Cour de cassation had already ruled, for civil-engineering works not subject to mandatory construction insurance, that a risk-definition clause keeps its full effect (Cass. 3e civ., 21 November 2019, n° 18-21.931). A construction firm can therefore be covered by two distinct regimes on the same project: mandatory décennale cover on building work packages, and a capped optional policy for work outside the mandatory scope (site works, landscaping, design engineering).

How should a construction firm check this cap before starting a project?

Three points to check before starting any project whose overall budget exceeds the firm's usual thresholds: the cost cap stipulated in the policy, the basis on which that cap is assessed (the firm's own contract or the whole operation), and the formal conditions for obtaining an extension of cover.

In practice, the firm needs to know the total cost of the operation — not just the amount of its own contract — as soon as it commits to the project. If that cost exceeds the cap stipulated in the policy, a request for an extension must be sent to the insurer and obtained by express agreement before work starts: the 2 July 2026 ruling makes clear that no extension is ever presumed. On large-scale operations run by several contractors (development zones, subdivisions, joint building schemes), the relevant cost is that of the whole operation, including the lots awarded to other firms — a point often overlooked at the time the policy is taken out.

This same vigilance applies to related décennale risks: the criminal penalties for operating without décennale cover, and the process for challenging a décennale insurance refusal before the Bureau central de tarification when standard cover is unavailable.

Frequently asked questions

Does the décennale cover cap apply to my contract or to the whole project?

To the real-estate operation as a whole, not just the contract awarded to the insured firm, according to the Cour de cassation (Cass. 3e civ., 2 July 2026, n° 24-12.598). Splitting the operation into separate lots does not reduce the basis on which the contractual cap is assessed.

Is a clause capping décennale cover at project cost valid?

Yes, when it applies to a work or activity outside the scope of France's mandatory construction insurance obligation. It then positively defines the insured risk and is not an abusive exclusion clause.

What happens if project cost exceeds the cap without an extension?

The insurer owes no cover at all. The Cour de cassation ruled out the proportional-capital rule (article L. 121-5 of the Insurance Code): this is a total absence of cover, not underinsurance.

Does this rule apply to a building's mandatory décennale cover?

Not in the same terms. For mandatory cover, no clause may reduce the minimum content of the standard policy wording (article L. 243-8 of the Insurance Code); such a clause would be deemed unwritten.

How is an extension of cover obtained before a large-scale project?

Through the insurer's express agreement, formalised in writing before work starts, stating the real total cost of the operation — not just the amount of the contract awarded to the firm.

What McLer does

McLer helps French SMEs and mid-sized companies in the construction sector read and negotiate the cover caps in their décennale liability policies and optional covers, before committing to large-scale projects. McLer identifies extension-of-cover needs against the real cost of the operation and manages the request with insurers, depending on each company's situation.

Running a project whose overall cost exceeds your usual thresholds? McLer can review the cover caps in your décennale liability policy and optional covers with you, depending on your situation.

---

McLer is an insurance brokerage specialised in corporate risk for the road transport and construction sectors. Based in the Paris region, McLer supports French SMEs and mid-sized companies in structuring, negotiating and managing their insurance programmes. This article describes French insurance law and regulatory practice; it does not describe insurance regimes outside France.