Delegation of borrower insurance: How does it work?

When you take out a mortgage, it is generally backed by borrower insurance (ADE), which takes over – according to the conditions provided for in the contract – in the event of default in repayment. Borrower insurance can be taken out freely with the establishment of your choice – what is called insurance delegation, in order to allow you to benefit from the cover that suits you best at the best price.

What is the role of borrower insurance?

Backed by a home loan, Borrowers’ Insurance (ADE) is a variation of death insurance: its role is to take over the repayment of the mortgage from the bank, in the event that you die.

Borrower insurance can be extended to cover other types of claims such as a certain number of cases of disability or incapacity, which would prevent you from working temporarily or permanently, depending on the options taken out. Borrower insurance can also cover the loss of a job, again under certain conditions.

What is a loan insurance delegation?

Thanks to the Lagarde law of 2010, when you take out your mortgage, you are free to choose either the borrower insurance offered to you by the lending institution, or borrower insurance from another company: this is what is known as “delegation of insurance”.

Be careful however, for your request for insurance delegation to be accepted, the guarantees and the amounts provided for in your contract must be equal to or greater than the conditions set by the lending institution.

All the characteristics required according to the policy of the establishment and the nature of your file must be put in writing on a standardized document called the Standardized Information Sheet (FSI), to allow you to compare more easily borrower insurance offers.

How to delegate borrower insurance?

If you are in the process of taking out your home loan, it is very simple, you are free to choose between the borrower insurance offer from the lending institution or from another insurance company.

If you signed your real estate contract less than twelve months ago and you wish to change borrower insurance, the Hamon law allows you to do so based on the Standardized Information Sheet (FSI) provided by the establishment lender

If you signed your real estate contract more than twelve months ago, you can operate the insurance delegation and change the contract once a year, on the date of signature of the loan offer.

What changes are coming?

The year 2022 promises to be rich in changes in the field of borrower insurance, for the greater benefit of consumers. Indeed, the Lemoine law, passed in February 2022, will apply from June for new contracts and from September for existing contracts.

This law provides, among other things:

  • The possibility of changing the borrower’s insurance contract, at any time during the life of your mortgage, without having to respect the deadline of the first twelve months or the anniversary date of signature of the loan offer.
  • The removal in some cases of the health questionnaire.
  • An update of the AERAS agreement and in particular an extension of the right to be forgotten.

So many measures aimed at making the borrower insurance market more fluid and broadening access to mortgages.

Stephanne Coignard ([email protected])

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