General Principles of Termination of Loan Insurance
Like any consumer contract, the loan insurance contract is subject to the common law of the contracts, it can thus be terminated by respecting a period of notice as well as a certain formalism generally stated in the general conditions of said contracts called “information notice” in the context of group contracts. In accordance with the provisions of Article L141-4 of the Insurance Code, this notice must be given to the insured person before the implementation of the contract at the latest at the time of accession. (Cass, 1st civ, March 30, 1994).
Simulation, Quote and Comparison of Credit Insurance
Information to borrowers about terminating loan insurance, principles, pitfalls to avoid, all important information before requesting the cancellation of a loan insurance being refunded.
1 year to change borrower insurance with the Mahon law
The Congilaw company allows you to opt for a “delegation of insurance”, which, when you subscribe a mortgage, is to subscribe your loan insurance outside the lending institution by choosing your insurer, provided that the outsourced contract with at least equivalent guarantees.
Thanks to the Mahon law, a new consumer law proposed by minister delegate for consumption and the social and solidarity economy, you now have one year to replace your credit insurance contract with another one., this period starting on the date of subscription of your loan.
You can take the time to play the competition between insurance companies to find cheaper loan insurance and more suitable guarantees than the contract you signed when signing your mortgage.
Also, thanks to the establishment of an effective annual rate of insurance, it is possible for you to compare the rates of insurance borrower more easily. In addition, with the Mahon law, fees charged by banks for the examination of insurance delegation offers are prohibited.
There are generally 2 types of loan insurance contracts:
The individual contract
Individual contracts which are generally concluded for a period of one year automatically renewable and which may be terminated on the anniversary date subject to compliance with a notice period, or at any time without notice, unless otherwise stipulated in the general conditions of said contracts. This termination must be done by registered letter with acknowledgment of receipt sent to the insurer after prior information from the lender of money. The banker may validly demand that the new insurance contract subscribed present guarantees similar or at least equivalent to the one being terminated. It is also imperative that the effective date of the guarantees of your new policy coincide perfectly with the effective date of termination of your old contract in order to avoid any period during which you will be deprived of coverage.
The group contract
Optional group memberships offered by most financial institutions for tied selling (credit + insurance) are also subject to termination. In accordance with the provisions of the appendix art. A132-4 of the Insurance Code, these contracts must explicitly mention in their information notice a certain number of details, particularly as regards the formalities for termination and transfer of these contracts.
The information note
The information notice given to the insured must be accurate, clear and precise. This is not the case if the information contained therein is erroneous, ambiguous or partial. Concerning more particularly the faculty of termination, very often these notices are content to pass it purely and simply under silence thus leaving to think wrongly to the consumer that these contracts can not be the object of any cancellation.
In reality, only the clear and precise provisions contained in the notice are opposable to the borrowers. Consequently, the subscribing financial institution can not in any case invoke the inaccuracy or silence of this notice to refuse the borrower’s request for cancellation and change of insurance. This silence of the general conditions, can validly be interpreted as a breach of the obligation of information set forth in article 1135 of the Civil Code and which weighs on the subscriber banker.
Provision of advice on the termination of the loan insurance
Our brokerage firm works closely with a law firm specializing in these matters. We can if you wish to ask him to study your case and possibly if the decision of your banker appears abusive or contrary to the legal and regulatory provisions in force send him a registered letter with acknowledgment of receipt by putting him on notice to comply with fulfillment of obligations. In order to judge the desirability of such an approach, we would need a copy of your loan offer as well as the general conditions of your insurance contract to study your case. For the payment of fees, our partner lawyer will send your banker a registered letter with acknowledgment of receipt to ask him to comply with his obligations. Know, Madam, Sir, that we are fully prepared to defend your best interests if such an approach interests you.