all that has changed

As part of a home loan, the cost of borrower’s insurance is far from negligible. This insurance, which is not mandatory, is general imposed by the banks because it makes it possible to guarantee a mortgage loan in the event of non-repayment of installments due to physical disability, loss of employment or death of the borrower. In the absence of insurance, a loan institution generally refuses to grant a mortgage loan.

The law of 28. February 2022, called the “Lemoine Act”, reforms this insurance by introducing new provisions “for fairer, simpler and more transparent access to the borrower insurance market”.

Possibility to change insurance at any time, simplified termination, better information for borrowers, but also the removal of the medical questionnaire… Here is everything you need to know about these new provisions.

Option to change insurance at any time

The law of 28. February 2022 allows people who have taken out a residential or mixed-use mortgage (residential and professional) to change their insurance contract from:

• June 1, 2022 for loan offers signed from this date;
• 1 September 2022 for loan offers signed before 1 June 2022.

It is now possible to cancel any time of the year, during the loanwithout having to wait for an anniversary date and without time limits or penalties.

The only requirement that the law makes when changing insurance is that the new insurance agreement must respect the minimum guarantees (death and disability for example) required by the lending bank.

Borrower’s insurance: simplified termination

The law of 28. February 2022 also simplifies the procedures. To notify the insurance company of its desire to terminate, the borrower may do so by letter or any other durable medium, by declaration made at the head office or at the representative of the insurance company, by extrajudicial action, by the same means of communication normally used with the organization or by any other means manner stipulated in the contract…

He must also inform the lender and send a request for insurance substitution to his bank.

The termination takes effect 10 days after the insurance company’s receipt of the notice of acceptance from the lender. The latter, in turn, must change the loan contract by a change and specify the new annual cost in percentage (APR) within 10 working days of receiving the replacement request.

On his side, the lender is obliged to accept the new contract, unless it does not provide a level of guarantee equivalent to the original contract. If he objects, he must state the reasons for the refusal, i.e. specify which information and guarantees are missing from the new contract.

The increased duty to inform

The information notice with the guaranteed risks and the conditions for bringing the borrower’s insurance into play, which is attached to the loan agreement, must in future clearly state the possibility that the borrower can terminate the insurance agreement at any timefrom the signing of the loan offer.

In addition, the insurance company must remind the borrower every year of the existence of this right to terminateand specify procedures and deadlines for notification and information to be observed.

Failure to comply with this duty to inform is subject to an administrative fine of a maximum amount of €15,000.

The end of the medical questionnaire

Before the Lemoine Act, the health questionnaire was systematic and allowed banks and insurance companies to apply additional premiums if they believed the borrower’s health condition was at “risk”.

Since 1 September 2022, the medical questionnaire has been abolished for everyone mortgages under €200,000 person (so €400,000 for a couple) and if the date of termination of the loan is planned before the insured’s 60th birthday.

The questionnaire remains in effect in the opposite case, if the loan is higher than €200,000 therefore or if the maturity occurs after the borrower’s sixtieth birthday.

The right to be forgotten: extension of the deadline

The right to be forgotten concerns people who have had a serious illness (such as cancer) to prevent them from being liable for an extra premium or even a refusal of insurance.

The period for the right to be forgotten therefore expires 10 to 5 years from the end of the therapeutic protocol.

From now on, a borrower who has been exposed to a disease no longer has to indicate it in the medical questionnaire if his therapeutic protocol has been completed for more than 5 years, regardless of the age at which the disease was diagnosed. .

Note, however, that the right to be forgotten does not apply to all pathologies.