No statutory obligation
The French commercial lease statute says nothing about insurance — all obligations are purely contractual and depend entirely on what the lease says
Breach = termination
Failure to insure in compliance with the lease clause is a breach that can justify termination. Require annual certificate of insurance from tenant.
Waiver ≠ insurer bound
A waiver of subrogation in the lease binds the parties — not their insurers. Lease clause and insurance policy must be drafted symmetrically.
Sub-tenants excluded
A waiver in the head lease does not protect sub-tenants (Cass. ass. plén., 28 May 1973) — address sub-tenant's position at every level of the tenancy chain

Insurance Obligations: Entirely a Matter of Contract

The French commercial lease statute says nothing about insurance. There is no statutory obligation to insure on either side — everything depends on what the lease says. In practice, all well-drafted commercial leases include an insurance clause, and the standard allocation is well established. Failing to comply with the insurance obligation is a breach of contract that can justify lease termination (Cass. 3e civ., 4 May 1994). Landlords should require the tenant to produce a certificate of insurance at entry and at each annual renewal.

Landlord typically insures
Building and Civil Liability
  • The building structure against fire, water damage, storm, and other standard risks
  • Civil liability for damage caused to third parties by the building
  • Loss of rental income (optional but common — perte de loyers)
Tenant typically insures
Contents and Occupancy Risks
  • Contents: furniture, equipment, stock, fit-out
  • Civil liability for occupancy risks (risques locatifs): fire, explosion, water damage caused to the building or third parties
  • Business interruption (optional but strongly recommended)

Insurance for Account — When the Tenant Pays the Building Premium

The lease can validly transfer the building insurance obligation to the tenant, who then insures the building on the landlord's behalf under an assurance pour compte arrangement (C. assurances, Art. L. 112-1). The tenant is the policyholder and pays the premiums; the landlord is the insured and beneficiary of any claim payment, with a direct contractual action against the insurer. Courts have characterised this as a liability insurance from the tenant's perspective and a property insurance from the landlord's (Cass. 3e civ., 13 November 1997).

Subrogation: The Default Position Without a Waiver Clause

Without a waiver of subrogation clause, the following sequence applies after a loss: the insurer pays the claim, then — by operation of Article L. 121-12, al. 1 of the Insurance Code — steps into the shoes of the party it has paid and exercises that party's rights against whoever caused the loss. If a fire caused by the tenant destroys part of the building, the landlord's property insurer pays the landlord and then brings a subrogation claim against the tenant or the tenant's liability insurer. This is the default position, and it can expose the tenant to significant claims even where both parties assumed they were mutually protected.

The Waiver of Subrogation: How It Works and Where It Fails

A waiver of subrogation clause in the lease is an agreement between landlord and tenant that neither will pursue the other (or the other's insurer) for losses covered by insurance.

Unilateral vs Reciprocal Waivers

A unilateral waiver benefits only one party. A reciprocal waiver runs in both directions. From an insurance perspective, a unilateral waiver is a factor that increases the risk burden on the insurer of the party who has renounced their right of action — that insurer must be notified by registered letter; failure to notify allows the insurer to apply the proportional premium rule to correct the imbalance.

Waiver Against the Person vs Waiver Against the Insurer

This is where most waiver clauses fail in practice. There are two distinct levels of waiver. A waiver against the contractual party (landlord or tenant) deprives the insurer of the subrogation action against that party, since the insurer can only step into the shoes of the insured to the extent the insured themselves had a right of action. A waiver against the insurer of the contractual party is a separate and additional step — the Court of Cassation has held that a waiver against the responsible party does not automatically extend to a waiver against that party's insurer (Cass. 1re civ., 2 February 1994; Cass. 2e civ., 10 September 2015). If the lease waives against the tenant but not against the tenant's insurer, the landlord's insurer may still have a subrogation action against the tenant's liability insurer.

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Warning — The Insurer Who Is Not Bound by the Lease Clause

A waiver of subrogation in the lease binds the parties to the lease — not their insurers, who are third parties to the lease contract. Under Article L. 121-12, al. 2 of the Insurance Code, if the insured has waived subrogation in such a way that the insurer can no longer exercise it, the insurer may be entirely released from their indemnity obligation. This creates a dangerous gap: the insured who has waived subrogation against both the party and their insurer, without obtaining their insurer's agreement to that waiver, may find themselves without cover at all. The waiver of subrogation clause in the lease and the corresponding provision in the insurance policy must be drafted symmetrically and simultaneously.

The Symmetry Requirement: Lease and Policy Must Match

A waiver of subrogation clause in the lease is only fully effective if the corresponding insurance policy also contains a matching waiver. If only the lease contains the waiver — but the policy does not — the insurer retains the right to bring a subrogation claim. If only the policy contains the waiver — but the lease does not — the waiver may not be enforceable between the parties. Achieving proper symmetry requires coordinating the drafting of the lease clause and the insurance policy at the same time, involving the insurers at the lease negotiation stage and obtaining their express agreement in writing.

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Practical Point — What the Clause Should Cover

For a waiver of subrogation to work as intended, the lease clause should: (1) be reciprocal, running in both directions; (2) expressly name both the parties and their respective insurers as beneficiaries of the waiver; and (3) require both parties to obtain the same waiver from their insurers as a condition of the insurance obligation. The insurers should confirm in writing that their policies contain the corresponding waiver. Any gap between what the lease says and what the policies say will be exploited at the moment of a loss — precisely when the parties least need that argument.

The Waiver Does Not Extend to Sub-Tenants

A waiver of subrogation clause in the main lease does not benefit a sub-tenant — confirmed by the Court of Cassation in a plenary assembly decision of 28 May 1973. A sub-tenant who causes a loss remains exposed to a subrogation claim from the head landlord's insurer. Where there is a sub-letting, insurance and subrogation provisions need to be reviewed at every level of the tenancy chain.

Insurance and Subrogation Checklist
  • No statutory obligation: everything depends on the lease clause — treat it as carefully as the rent clause. Require annual certificate of insurance from tenant; failure to insure in compliance with the lease can justify termination (Cass. 3e civ., 4 May 1994).
  • Assurance pour compte (Art. L. 112-1): if the building insurance is transferred to the tenant, the tenant is policyholder and pays premiums but the landlord remains the insured and beneficiary with a direct action against the insurer.
  • Default subrogation (Art. L. 121-12 al. 1): without a waiver, the insurer who pays a claim will pursue the responsible party by subrogation. A waiver against the contractual party does not automatically waive against their insurer — both must be named separately (Cass. 1re civ., 2 Feb. 1994; Cass. 2e civ., 10 Sept. 2015).
  • Symmetry is essential: the lease clause and the insurance policy must be drafted simultaneously with matching waivers. A unilateral waiver must be disclosed to the waiving party's insurer by registered letter (Art. L. 121-12 al. 2 — failure to disclose risks the insurer being released from the indemnity obligation entirely).
  • Sub-tenants not protected (Cass. ass. plén., 28 May 1973): the waiver in the head lease does not benefit sub-tenants. Review insurance and subrogation provisions at every level of the tenancy chain — main lease and sub-lease independently.
Reviewing Insurance Provisions in a French Commercial Lease?

Insurance clauses and waiver of subrogation arrangements require coordination between the lease and the insurance policy. We advise landlords and tenants on the drafting of insurance obligations and the practical steps needed to achieve genuine mutual protection.

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This article is for general information and educational purposes only. It does not constitute legal advice and does not create a lawyer-client relationship. Laws and regulations may have changed since publication. Always seek qualified French legal and insurance advice on the insurance provisions of a French commercial lease.