all that has changed

As part of a home loan, the cost of the borrower’s insurance is far from negligible. This insurance, which is not mandatory, is generally imposed by banks, because it allows you to guarantee a mortgage in the event of non-repayment of the installments due to physical incapacity, loss of job or death of the debtor. In the absence of insurance, a credit institution refuses, in principle, to grant a mortgage.

The law of February 28, 2022, called the “Lemoine law”, reforms this insurance by introducing new provisions “for fairer, simpler and more transparent access to the insurance market for borrowers”.

Possibility to change insurance at any time, simplified termination, better information for borrowers, but also removal of the medical questionnaire … Here is everything you need to know about these new provisions.

The ability to change insurance at any time

The law of 28 February 2022 allows individuals who have taken out a mortgage for residential or mixed use (residential and professional) to change their insurance contract from:

• June 1, 2022 for loan offers signed starting from that date;
• September 1, 2022 for loan offers signed before June 1, 2022.

Cancellation is now possible at any time of the year, for the entire duration of the loanwithout having to wait for an anniversary date, and without expiry or penalties constraints.

The only requirement imposed by law in the event of an insurance change is that of the new insurance contract must comply with the minimum guarantees (e.g. death and disability) required by the lending bank.

Borrower Insurance: Simplified Termination

The law of February 28, 2022 also simplifies the procedures. To notify the insurance company of its intention to withdraw, the borrower can do so by letter or other durable means, by means of a declaration made to the head office or to the representative of the insurer, by way of an out-of-court deed, with the same means of communication normally used. with the organization or by any other means provided for in the contract …

He must also notify the lender and submit an insurance replacement request to his bank.

Termination takes effect 10 days after receipt by the insurer of the notification of acceptance by the lender. The latter must, on his part, modify the loan agreement with a modification and specify the new annual percentage rate (APR) within 10 working days of receiving the replacement request.

On his side, the lender is obliged to accept the new contract, unless it has a level of guarantee equivalent to the initial contract. If he opposes, he must then indicate the reasons for the refusal, or specify which information and guarantees are missing in the new contract.

The duty of information strengthened

The disclosure with the list of guaranteed risks and the methods for activating the debtor’s insurance, attached to the loan agreement, must from now on clearly indicate the possibility for the borrower to withdraw from the insurance contract at any timefrom the signing of the loan offer.

Also, the insurer must remind the borrower each year of the existence of this right of withdrawaland specify the methods and deadlines for notification and the information to be respected.

Failure to comply with this information obligation entails a pecuniary administrative sanction up to a maximum of 15,000 euros.

The end of the medical questionnaire

Before the Lemoine law, the health questionnaire was systematic and allowed banks and insurers to apply additional premiums if they considered the health of the borrower to be “at risk”.

From 1 September 2022, the medical questionnaire was abolished for everyone home loans of less than 200,000 euros per person (therefore € 400,000 for a couple) and if the date of the maturity of the loan is expected before the 60th year of age of the insured.

The questionnaire remains in force in the opposite case, if the loan is therefore greater than 200,000 euros, or if its duration occurs after the borrower’s sixtieth birthday.

The right to be forgotten: extension of the deadline

The right to be forgotten is for people who have had a serious illness (such as cancer), in order to avoid them being subject to an additional premium, or even denial of insurance.

The period of the right to be forgotten passes like this 10 to 5 years from the end of the therapeutic protocol.

From now on, a borrower who has been a victim of a disease will no longer have to specify this in the medical questionnaire if his treatment protocol has been completed for more than 5 years, and this regardless of the age at which the disease was diagnosed.

Please note, however, that the right to be forgotten does not apply to all conditions.