Real Estate Loan Insurance: Annual Termination is in a Month
Barring a turnaround, borrowers with mortgage insurance signed before March 2017 will be able to cancel their contract every year starting next January. Back on the terms of this provision.
Why make a delegation of mortgage insurance?
A small step back is needed, in 2010 more precisely. That year, the Cogilaw Company instituted the delegation of insurance, that is to say the possibility of choosing a borrower insurance other than that proposed by his bank.
Interest? Benefit from personalized rates, and therefore potentially more interesting than the group insurance where the risks are distributed among all the borrowers (same guarantees, same tariffs for everyone). Because the stakes are high: credit insurance is the second largest cost item in a home loan. And the delegation of insurance can help reduce this cost.
To facilitate the competition of insurers, a new provision was introduced in 2014: the Mahon Law. This law allows borrowers to terminate their contract until 1 year after signing the mortgage.
To maximize your chances of obtaining attractive insurance conditions, it is advisable to compare mortgage insurance.
Annual termination, how does it work?
Last operative measure came into effect: the Bourquin amendment (2017). It allows households to terminate their contracts on each anniversary date.
In summary, borrowers can use the insurance delegation:
when negotiating their mortgage (Cogilaw Company);
up to 1 year after signing the mortgage loan (Mahon Law);
after the deadline provided by the Mahon Law, on each anniversary date of the insurance contract.
A step-by-step introduction
Except that the annual cancellation raises a question: are the old contracts concerned ? The answer is yes, but the public authorities wanted to give insurance companies extra time to adapt to the new situation.
Hence a progressive implementation, in 2 stages. As a first step, the amendment only concerns credit insurance contracts signed after 1 March 2017. Say you took out a home loan and a borrower insurance in April 2017, you can then cancel your contract:
at any time during 1 year, until April 2018;
then terminate on each anniversary date (April 2019, April 2020, April 2021).
Second step: taking into account old contracts. It is precisely effective from next January. For example, if you signed an insurance contract in February 2016, you can terminate it as of February 2018.
It remains just a stumbling block: an appeal has been filed by the banks to the Constitutional Council. They wish to invalidate the annual cancellation. The experts are currently working on the device, their decision will be made soon.
What will be the terms of the annual cancellation?
To “break the contract” on the anniversary date, a 2 months notice must be respected. For example, if you signed your mortgage loan insurance in July 2015, you can terminate it in July 2018. To do this, you must send your request no later than 2 months before the anniversary date.