In 2014, the Hamon law allowed mortgage holders to change insurance policy in the year after obtaining the loan, provided that the replacement policy offers cover that “is at least equivalent”. This option is now available to all borrowers on the policy anniversary date, however long they have had their loan.
The Constitutional Council has just ratified an amendment passed in early 2017 that allows individuals to change their loan insurance much more easily.
Until then, insurance bankers usually offered their own cover, on which they made a high profit, with total premiums sometimes amounting to nearly a third of the total cost of the loan.
The Constitutional Council’s decision is unfavourable to insurance bankers, who referred the matter to the council, but has been welcomed by alternative insurers and consumer associations.
Insurance policies can now be cancelled on each anniversary date by sending a registered letter to the bank at least two months before the anniversary date of the contract.
Before proceeding cancellation, the borrower must take out a replacement policy offering at least the same cover as the initial policy. On receiving the new insurance policy, the lending bank has ten days to accept or reject it. If it rejects it, it must explain its decision in writing.
But the credit institution can oppose it only if the new policy does not offer the same cover as the initial policy. If it rejects it wrongly or does not provide a written response within 10 working days of receiving the new insurance policy, the bank risks a fine of 3,000 euros.