What is mortgage insurance used for?
In theory, the bank systematically requests non-obligatory loan insurance to guarantee the loan it provides.
Borrower insurance aims to guarantee payment of the outstanding capital if the borrower can no longer meet his deadlines due to certain events such as accident or illness. This insurance thus minimizes the risk of non-payment for the lender and secures the borrower’s property project, as the insurance company takes over if the borrower is unable to repay the monthly installments on the loan.
Borrower insurance covers several risks:
- The total and irreversible loss of autonomy (PTIA).
- Partial or total permanent disability (IPP) and (IPT).
- The temporary incapacity guarantee (ITT).
- Job loss guarantee.
What is insurance delegation?
To secure the mortgage loan the bank provides, the bank offers its loan insurance called group insurance. But since the Lagarde Act of 2010, the borrower is no longer obliged to choose bank insurance. This possibility of choosing your loan insurance from the organization of your choice is called delegation of insurance.
The only condition: that the guarantee level for the new contract at least corresponds to the level of the loan insurance contract offered by the bank. This is known as the principle of equivalence of the guarantee level.
Cardif’s delegated borrower insurance, compatible with the requirements of the lending bank, allows you to customize your contract as best as possible by choosing guarantees adapted to your profile and needs, while benefiting from an advantageous tariff. You also benefit from the solidity of BNP Paribas Cardif, the world leader in loan insurance.
The benefits of an insurance delegation
Insurance delegation therefore provides the opportunity to compare market offers and choose the insurance that best meets the borrower’s needs at a competitive rate.
Delegation loan insurance is therefore interesting if the borrower wants to benefit from tailor-made loan insurance according to his profile and his real needs (weight, age, state of health, profession, etc.), delegated insurance adapted to the individual subscriber’s profile according to the risk he represents .
Borrower insurance, one of the levers that do not exceed the attrition rate
One of the other interests of the delegation of loan insurance is to lower the annual effective interest rate (APR) and potentially to lower it below the wear rate corresponding to the maximum legal interest rate that credit institutions are allowed to practice when granting loans.
With interest rates falling in recent years, loan insurance can represent 30% to 50% of the total cost of your loan and is an important lever in getting your mortgage.
The ability to cancel your loan insurance agreement at any time with the Lemoine Act
The Lemoine Act of 2022 formalizes the termination at any time of the borrower insurance agreement, even beyond the first year. Only condition: that the level of guarantee for the contract you wish to replace is at least equivalent to the level of your current borrower’s insurance.
No formality is required regarding the termination request. The cancellation request can now be made in any way (ordinary or registered post, e-mail, customer area). Likewise, no time limit is required.
A reinforced obligation to provide information on policyholders’ right of termination
Another innovation created by the Lemoine law, the obligation to provide annual information at the expense of the insurance company about the right of withdrawal for the insured, as well as the methods for implementing this right of withdrawal.
The notification to the insured can be made on paper or any durable medium (e-mail, information about the customer area, etc.).
Finally, the insurance company is obliged to mention the cost of borrower insurance accumulated over 8 years in any document submitted prior to the loan offer and mention the cost of the insurance: simulation and estimate, advertising communication. .
What to do in case of refusal to delegate loan insurance?
If the lender refuses the delegation of insurance, for example, due to non-compliance with the principle of equivalence of guarantees, the borrower who wants to contest this refusal can write a registered letter with acknowledgment of receipt to contest this refusal. the loan institution’s manager or customer service department. If necessary, the borrower can contact the competent bank broker per mail. This mediation process is free, confidential and impartial.
The bank broker must respond within three months of his referral. The competence and independence of the mediator must facilitate the search for an amicable solution. If the broker’s opinion does not satisfy the borrower, or if the bank refuses to follow this opinion, there is still a last resort: referral to the competent court.