French Court Rules Bank Doesn’t Refund Insurance Premiums on Canceled Mortgages

The French Cour de Cassation, the country’s highest court, ruled on March 11, 2026, that banks are not obligated to reimburse insurance premiums paid by borrowers after a home loan is annulled. The decision, concerning loans denominated in Swiss francs, clarifies the financial responsibilities following judicial cancellation of mortgage agreements.

The case stemmed from a dispute over loans initially granted in Swiss francs, which were later invalidated by lower courts. Although borrowers were ordered to repay the principal amount of the loans to the bank, the bank was instructed to refund fees associated with the loan’s execution, a point of contention remained regarding the reimbursement of insurance premiums covering the risk of death. The bank argued it had no obligation to return these premiums to the borrowers.

Borrowers had secured these loans with group insurance policies arranged by the bank with an insurance provider. These collective insurance agreements, a common practice in French mortgage lending, require adherence as a condition for loan approval. The central question before the Cour de Cassation was whether the cancellation of the loan necessitated a refund of the insurance premiums paid throughout the loan’s term.

The court’s ruling establishes that while the bank facilitated the group insurance contract, a direct contractual relationship exists between the borrower and the insurer, not the bank. According to the court, the bank’s role in establishing the collective contract does not make it a party to the insurance agreement concluded with the borrower. The bank is not legally required to reimburse premiums it did not directly receive or benefit from.

This decision impacts borrowers who have had their loans annulled, clarifying that a full recovery of all associated costs is not automatic. The court emphasized that reimbursement is contingent on who actually received the funds in question. The ruling, documented under case number 24-21.018 by the 1st Civil Chamber of the Cour de Cassation, underscores that the annulment of a loan does not automatically trigger a refund of insurance premiums paid to an insurer through a group contract.