The double legal interest rate applicable to an insurer who failed to make an offer of compensation to the victim of a road traffic accident is distinct to the order to pay compensation to the victim of a road traffic accident.
Only the insurer who did not make a compliant offer to the victim is sanctioned with the double legal interest rate.
Under French law, articles L. 211-9 and L. 211-13 of the Insurance Code provide that :
- The insurer who guarantees the liability of the driver of a vehicle involved in a road traffic accident is compelled to send an offer of compensation to the victim which shall include all the compensable heads of losses within a given time limit, and
- where the offer has not been made within that time limit, the amount of compensation offered by the insurer or awarded by the judge to the victim shall automatically bear interest at the double of the legal rate from the expiry of the time limit until the day the offer or the judgment becomes final.
In a decision of October 6, 2022, the Court of Cassation recalls this double principle (see already Cass. 2e civ., May 25, 2022, n° 21-10.439) and distinguishes between the sanction of the doubling of the legal interest rate, on the one hand, and the obligation to compensate for the harmful consequences of the accident, on the other hand: the insurer of the third party who is responsible for the road traffic accident does not have to bear the burden of assuming the doubling of the interest rate which must be borne by the insurer of the driver involved in the road traffic accident who failed to make the indemnification offer in the conditions and time frame provide by law (absence or insufficient offer in the timeframe provided by French law).
The facts which the Cour de cassation had to decide are as follows:
A road traffic accident occurred in France between two motorists. One was insured with GMF, while the other, a Spanish citizen, was insured with Argos which owned Liberty Seguros. An 11-month-old child was seriously injured in the accident.
Liberty Seguros and the Bureau Central Français (BCF) were ordered to pay compensation to the victims and GMF claimed for the reimbursement of the damages it had paid.
The Paris Court of Appeal (CA Paris, March 2, 2021) had ordered Liberty Seguros and the BCF to pay for the full damages, as well as the doubling of the legal interest rate. The court of appeal of Montpellier (CA Montpellier, Nov. 4, 2014) had previously held Liberty Seguros and BCF jointly and severally liable for the consequences of the accident that had occurred. As a result, Liberty Seguros, the insurer of the third party at fault, as well as BCF, were found legally liable to make an offer to the victims.
The debates before the Court of Cassation focused on the sanction of the double legal interest rate provided by French law.
The Cour de cassation overturned the decision of the court of appeal of Paris March 2, 2021 and decided that as it was GMF who had failed to make the offer as per articles L. 211-9 and L. 211-13 of the French Insurance Code, and it was up to this insurer to bear the consequences of the double interest rate on the compensation.
