Borrower insurance
Is borrower insurance mandatory? No, but the lender may require it: who decides what
No law requires you to insure a mortgage, but the lender may require it: what the lender decides, what you choose, and what to do in the event of a refusal.
No: no law makes borrower insurance mandatory. It is the lender who may require it in the loan offer, and who sets the required guarantees and the portion of the capital to be covered. The borrower, for their part, chooses the insurer: a contract taken out elsewhere cannot be refused if it provides an equivalent level of guarantee, and any refusal must be explicit and justified.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- No law requires you to insure a mortgage: the legislation regulates the insurance that the lender offers or requires, without making it a legal condition.
- It is the lender who imposes the requirement, in the loan offer, and who sets the required guarantees and the portion of the capital to be covered, guarantee by guarantee.
- Requiring insurance is not imposing its own: a contract from another insurer, with an equivalent level of guarantee, cannot be refused.
- Equivalence is judged on the lender's criteria: a cheaper contract that does not meet them may be refused, by an explicit and justified refusal.
- When no insurer accepts, other guarantees may be proposed to the lender, who remains free to refuse them.
No: no law makes borrower insurance mandatory. The lender may require it in the loan offer, and you choose the insurer, provided the guarantees are equivalent. The entire borrower insurance file, including rental investment.
Does a law mandate borrower insurance?
No. All texts start from the same point: the lender proposes a contract, or requires insurance. When it is required, it is by the lender, by contract.
The standardised information sheet even provides for the mention “Your lender does not require any insurance for the granting of your loan”.
La différence entre deux taux annuels effectifs globaux : l'un calculé en supposant l'assurance intégralement exigée par le prêteur, l'autre en supposant qu'aucune assurance n'est exigée
- En vigueur depuis le
- Source
- Article R. 314-12 du code de la consommation — Légifrance
The insurance pays on your behalf in the event of a serious incident; the mortgage or the guarantee, no.
The lender sets the guarantees, in writing
It sets the required guarantees and the fraction of the capital to be covered, in the standardised information sheet, with its equivalence criteria. It is this document that is authoritative, not a telephone exchange.
Le prêteur
Avant l'offre, quand vous faites examiner le contrat d'un autre assureur, le prêteur lui transmet, par votre intermédiaire, les types de garanties exigées, la part du capital à couvrir garantie par garantie et le rappel de ses critères d'équivalence.
- En vigueur depuis le
- Source
- Article R. 313-23 du code de la consommation — Légifrance
Lors de la première simulation
- En vigueur depuis le
- Source
- Article L. 313-10 du code de la consommation — Légifrance
See each guarantee and, for two people, the proportion.
The lender requires it, you choose the insurer
It cannot reject a policy taken out elsewhere if the guarantees are equivalent to those it proposes.
| Question | Who decides | Page covering it |
|---|---|---|
| Must the loan be insured? | The lender, in its loan offer | This one |
| Which guarantees, on what fraction of the capital? | The lender, for each guarantee | The guarantees |
| With which insurer? | You, at equivalent guarantees | The delegation |
| Is the submitted policy equivalent? | The lender, on its criteria, by a reasoned refusal if it says no | The equivalence |
| And after signing, can it be changed? | You, whenever you wish, under the same condition | The Lemoine Act |
A refusal is reasoned. If it accepts, the lender changes neither the rate nor the conditions, and charges nothing.
- Résiliation possible à tout moment oui
- Prise d’effet après réception de la demande 10 jours
La substitution reste soumise à l'équivalence des garanties et à l'accord du prêteur : en cas de refus, le contrat en cours n'est pas résilié, et le prêt ne reste jamais sans assurance acceptée.
- En vigueur depuis le
- Source
- Article L. 113-12-2 du code des assurances — Légifrance
No insurer accepts? The solutions
The loan then depends on what the lender accepts in its place, and it can refuse. For an aggravated health risk, an agreement frames the review.
See insurance refusal and AERAS: savings as guarantee, third-party surety, another two-way allocation, shorter term.
Last resort: the insurance proposed by the lender is refused to you? The loan is resolved by right if you request it, without fees. The deadline runs from the notification of the refusal: note its date.
Before the loan offer: note down what the lender requires
Guarantees, per-person share, equivalence criteria. As a mandate holder for a mortgage intermediary, I have no control over either the insurer or the lender. The activity of insurance intermediation is carried out as an ancillary activity to the activity of intermediation in banking operations: this article does not constitute an offer of insurance, nor personalised advice on a specific contract.
Documents for the file, fees. Have your information sheet read to you over the phone.
Create your file: the insurance is prepared alongside the loan.
Sources
- Légifrance — Article L. 313-29 du code de la consommation
- Légifrance — Article L. 313-30 du code de la consommation
- Légifrance — Article L. 313-32 du code de la consommation
- Article R. 314-12 du code de la consommation — Légifrance
- Article R. 313-23 du code de la consommation — Légifrance
- Article L. 313-10 du code de la consommation — Légifrance
- Article L. 113-12-2 du code des assurances — Légifrance
- Légifrance — Article Annexe à l’article R313-8 du code de la consommation
- Article R. 313-1 du code de la consommation — Légifrance
Read next
- Home loan insurance in Lyon: Sandy MASCART
- Mortgage in Lyon: frequently asked questions
- Borrower insurance guarantees: what death, total and irreversible loss of autonomy, total and permanent incapacity, permanent total disability and permanent partial disability actually cover The five guarantees of loan insurance, in the order they apply: what triggers them, who decides, and the line in the policy document that settles it.
- Delegation of borrower's insurance: when to request it for a new loan? For a new loan, the delegation of insurance is prepared before the offer: documents to request, order of procedures, what the bank cannot do.
- Mortgage insurance refused or surcharged: the AERAS agreement, appeals and solutions Refusal, exclusion or surcharge: the three levels of AERAS review, the capping mechanism, appeals, and the realistic alternatives when nothing works out.
All articles on this topic: Borrower insurance