Borrower insurance: why alcohol abuse can rob you of your mortgage repayments

The “excess glass” can be very expensive. In addition to increasing the risk of accidents, alcohol can also cost you hundreds of thousands of dollars. Examining the contracts, which make up 57% of the market, the Financial Sector Advisory Committee (CCSF) found in its study published on 21 December that borrower insurance does not cover accidents linked to “acute alcoholism”. In this case, your mortgage must be repaid by you or your heirs, without you having the opportunity to assume this burden.

In fact, everything will depend on the seriousness of your accident, but also on the actor with whom you signed the contract. For this specific scenario, the contracts of the banks – Crédit Agricole, Banque Populaire-Caisse d’Epargne – are generally more protective than those of specialized competitors – Axa, Macif, Generali.

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Forget drunk driving

Let’s start with the good news section. Fatal accidents – thereby activating the death guarantee – as a result of intoxication are 100% covered by the contracts. But the devil is in the details because more than a third of bancassurance cover (36%) and insurance companies (33%) only cover accidents that happen outside of “land motor vehicles”. In other words, it is impossible to obtain compensation with a car, a two-wheeler or an electric bicycle.

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So be careful not to have signed a contract that is too restrictive in the areas of care. Therefore, be careful with so-called “alternative” contracts from banks. Since a customer refuses to take out loan insurance, the company can take out a cheaper contract to keep the individual at home, but also less coverage. The proof: among the 14 alternative contracts on the market that CCSF studied, only 21% cover deaths caused by drink-driving.

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Disability is very poorly covered

Things go wrong as soon as the accident is not fatal. For example, the insured may suffer from a total and irreversible loss of autonomy (PTIA). This warranty, one of four that must be included in your contract, protects anyone with dependents. But be careful. If banks cover this type of accident at the same level as death, external alternative insurance companies are only 48% to support it if you were driving. Note that quite simply… none of the banks’ alternative contracts include this scenario in their refund scope.

If the severity of your accident is less, it will be much more difficult to cover your monthly credit payments. The case of temporary incapacity for work (ITT) is telling. If a doctor has prescribed you a suspension of work for several months, 100% of the contracts will reimburse you on paper. Except that again, 42% of bank contracts and 66% of their competitors exclude from this refund claim that is due to your drunk driving.

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Worse. Partial permanent disabilities (IPP) are even less covered. Behind this technical name hides a simple reality: you become partially disabled, physically or mentally, by the percentage determined by the medical expert. In these conditions, the exercise of your professional activity is more or less hindered. However, don’t expect to be accompanied by your insurance company. “The exclusions for alcoholism are wider in the case of disability” notes the CCSF. Because 58% of bank contracts and 61% of insurance contracts deny coverage. You’ll only have peace of mind – coverage regardless of the event – in 25% and 14% of contracts respectively.