Revolutionizing Borrower Insurance: A Historic Look at Legislative Advances and How to Save Thousands

The ability to renegotiate or change your borrower insurance represents a major advance in consumer rights, an advance that took more than ten years to come to fruition. A look back at the evolution of the law and the good reflexes to make the most of it.

Historical milestone in legislative developments

Before 2010, the regulations concerning borrower insurance associated with a real estate loan were very strict…and above all, very favorable to banks.

The Lagarde law introduced the principle of insurance delegation allowing borrowers to freely choose their borrower insurance outside the lending institution, provided that the level of coverage is equivalent (see the mandatory guarantees for borrower insurance).

This reform has helped to slightly increase competition in the market, with around 20% of borrowers opting for external insurance in 2016. Lemoine lawit requires insurers to inform policyholders of their right to change insurance.

Then came the Bourquin Amendment which extended the option for annual termination to any time after the first year of the loan, thereby providing borrowers with an annual window to renegotiate regardless of when they took out their loan.

The high cost of borrower insurance

While improving the rights of subscribers with regard to their contracts, these legislative advances mainly concern potential savings on the total cost of a real estate loan.

For a loan of €200,000 over 20 years with an interest rate of 1.25% and an insurance rate of 0.36%, the total cost of insurance can reach around €14,400. By renegotiating for a reduced rate of 0.18%, borrowers can save up to €7,200, or a halving of the cost of insurance. This may be particularly interesting for a loan insurance for smokers For example.

In 2024, a credit at 1.25% is almost science fiction, rates reach 4%, which raises loan costs and significantly increases insurance prices.

Changing borrower insurance: a more advantageous approach than before

With legislative developments, changing borrower insurance is much more interesting today than in 2012, for example.

The savings achievable through renegotiation or change of contract can amount to thousands, or even tens of thousands of euros over the entire duration of the loan. This approach also allows subscribers to adapt their insurance to personal changes such as professional or health changes, guaranteeing optimized coverage in terms of financial costs and guarantees.