When can you cancel a borrower insurance contract?

From a legislative standpoint, borrower insurance is not compulsory. But in fact, it is almost impossible to take out a mortgage without taking out insurance in parallel. This covers various risks such as unemployment, invalidity and incapacity for work. This credit insurance represents An additional cost not to be neglected when calculate your budget during a real estate investment. This subscription is a commitment that lasts throughout the duration of the credit, but termination possibilities are possible.

Since 26-7-2014, the Hamon law allows you to terminate your borrower insurance at any time during the first year of the contract. This requires sending a registered letter to the bank or the insurer concerned, with a notice period of fifteen days. Be careful though, it is impossible not to have taken out credit insurance which will take over, and it must present guarantees at least equivalent to those provided for in the initial contract.

Termination of borrower insurance possible each year

By prospecting and negotiating, it is possible to find borrower insurance with equivalent guarantees at a lower cost. Therefore, it may be interesting to renegotiate your insurance. Canceling credit insurance is not that easy after the first year of the contract. This has nevertheless been possible since 1-1-2018 and the promulgation of the Bourquin amendment. This amendment stipulates that borrower insurance can be canceled each year on the anniversary date of the contract. In this case, two months’ notice must be respected. The steps must therefore be taken upstream, and here again a registered letter must be sent within the allotted time, and the new one must provide at least equivalent guarantees. It is important to check the date taken into account by the bank or the insurer. This can in fact be the date of signature of the contract or the date of its implementation. Finally, be aware that in the event of early repayment of the credit, the borrower insurance ends. de facto and that it is also possible to terminate it in the event of the sale of the property or of a change in marital or professional situation.

Termination of borrower insurance, possibly future developments

Recently, the Financial Sector Advisory Committee (CCSF) issued a proposal so that borrower insurance can be terminated at any time, without waiting for the anniversary date of the contract. The Ministry of the Economy and Finance seems to be in favor of this proposal, but nothing has been done. Consultation with banks and insurers will have to be carried out for such a project to see the light of day. In order to reach an agreement, it is planned to grant compensation to insurers and bankers. Thus, a notice period will have to be fixed and it is envisaged that a minimum period of engagement be provided for in the contract. This period could be two or three years. There is therefore a good chance that things will continue to evolve and that the renegotiation of borrower insurance will be made easier.

(By the editorial staff of the hREF agency)

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