On a legislative level, borrower insurance is not compulsory. But in fact, it is almost impossible to take out a mortgage without taking out insurance at the same time. This covers various risks such as unemployment, invalidity and incapacity for work. This credit insurance represents An additional cost not to be overlooked when calculate your budget when investing in real estate. This subscription is a commitment that lasts throughout the duration of the credit, but possibilities of termination are possible.
Since 26-7-2014, the Hamon law allows you to terminate your borrower insurance at any time during the first year of the contract. This requires sending a registered letter to the bank or insurer concerned, respecting a fortnight’s notice. Be careful all the same, it is impossible not to have taken out credit insurance which will take over, and it must present guarantees at least equivalent to those provided for in the initial contract.
Termination of borrower insurance possible each year
By prospecting and negotiating, it is possible to find borrower insurance with equivalent guarantees at a lower cost. Therefore, it may be interesting to renegotiate your insurance. After the first year of contract, terminating the credit insurance is not so simple. This is nevertheless possible since 1-1-2018 and the promulgation of the Bourquin amendment. This amendment stipulates that the borrower’s insurance can be terminated each year on the anniversary date of the contract. In this case, a two-month notice must be respected. The steps must therefore be taken upstream, and again a registered letter must be sent within the time allowed, and the new one must provide at least equivalent guarantees. It is important to check the date taken into account by the bank or the insurer. This can indeed be the date of signature of the contract or the date of its implementation. Finally, be aware that in the event of early repayment of the credit, the borrower insurance ends de facto and that it is also possible to terminate it in the event of the sale of the property or a change in marital or professional situation.
Termination of borrower insurance, possibly future developments
Recently, the Financial Sector Advisory Committee (CCSF) issued a proposal so that borrower insurance can be terminated at any time, without waiting for the anniversary date of the contract. The Ministry of Economy and Finance seems to be in favor of this proposal, but nothing has been done. Consultation with banks and insurers will have to be conducted for such a project to see the light of day. To reach an agreement, it is envisaged to grant compensation to insurers and bankers. Thus, a notice period will have to be fixed and it is envisaged that a minimum duration of commitment be provided for in the contract. This duration could be two or three years. There is therefore a good chance that things will change further and that the renegotiation of borrower insurance will be facilitated.
(By the editorial staff of the hREF agency)