Gone is the near-monopoly of bankers on borrower’s insurance; all individuals who have or will take out a mortgage loan will be able to annually cancel their insurance. This is an opportunity to find a cheaper option elsewhere at another bank or at their traditional insurer.
A new law will allow all borrowers with a borrower’s insurance contract linked to their mortgage loan to cancel this insurance on the annual due date and replace it with another.
This legislation aims to end the near-monopoly of banks on borrower insurance and allow homeowners to renegotiate their insurance contract throughout the duration of the mortgage loan.
Specifically, for loan offers issued from February 22, 2017, this reform will apply immediately. For borrower insurance contracts already in effect before this date, the reform will only apply from January 1, 2018.
However, the new insurance contract proposed as a replacement must offer equivalent coverage to that of the bank’s insurance contract that provides the loan.
As a result, annual cancellations will intensify competition between banks and insurers since in 85% of cases, borrower’s insurance is taken out with the bank that grants the loan. According to some specialists, this opportunity will allow household purchasing power to increase by 500 to 700 euros each year on contracts that can last up to 25 years. The savings calculation is quickly done!
The borrower’s insurance contract, taken out as a guarantee for a loan, generally covers the risks of death, disability, incapacity, and for some contracts, the risk of job loss. It thus protects both the borrower and the credit institution.
