Home loan insurance, or borrower insurance, is systematically requested when you take out a loan to finance your house or apartment. And for good reason, it guarantees the payment of your installments for you in the event of disability or death and therefore constitutes a guarantee for the bank.
But the rates go from single to double for the same guarantees. In this context, when can you change mortgage insurance? And how can the competition be played effectively?
What is the borrower insurance delegation?
The delegation of insurance is the consumer’s right to freely choose your borrower insurance and therefore the organization with which it subscribes. For its part, the banking establishment that finances your mortgage has no other choice than to accept the delegation of insurance, if you offer a at least equivalent mortgage insurance to theirs.
When to compete for home loan insurance?
You will understand, you can, on paper, play the competition from the subscription of your mortgage with your bank. However, be aware that bankers take a dim view and encourage you to take their own contract.
The explanation is simple, it is a particularly interesting insurance contract for them, because the insured risk only rarely materializes. We estimate the borrower insurance margin rate of around 50% (for 100 euros of contribution paid, only 50 euros are paid to all insured).
Before taking out your mortgage
Whether you go through a physical or online broker, or whether you negotiate your mortgage yourself, you have the possibility of taking out your borrower insurance with the insurer of your choice.
However, if the bank is inclined to grant you a particularly favorable borrowing rate or loan terms on condition that you take out borrower insurance with them, do so.
Indeed, to have the butter and the money of the butter is not always favorable in negotiations, where each makes concessions to have the favors of the other. You can change borrower insurance quickly, have no fear in this regard.
Within 12 months of signing the mortgage offer with the Lagarde law
The Lagarde law, which entered into force in September 2010, gives borrowers the possibility of taking out their mortgage insurance from another institution than the one that granted the loan.
Subject toguarantee equivalence, you can change borrower insurance at any time within 12 months of signing your mortgage offer.
For delegation to be possible, you must follow the following procedure:
- Send the termination request at least 15 days before the end of the 12-month period
- Join thesubstitute offer so that the bank or the insurer can verify the equivalence of guarantees
- If the substitution is accepted, it takes effect 10 days after the lender’s acceptance, or on the date agreed with the new insurer if it is expected after more than 10 days.
If you missed the boat of the Lagarde law and you have been involved with your bank for more than a year, there is another solution …
At each annual expiry of the contract with the Hamon law
The Hamon law, for its part, came into force in July 2014, and gives the borrower the possibility of changing insurer at each annual contract expiry (this is the date of acceptance of the loan offer), always subject to the equivalence of guarantees.
To do this, you will need to follow the classic insurance termination procedure, namely:
- Send a termination letter by registered mail with acknowledgment of receipt, respecting a notice period of 2 months
- Set up the new borrower insurance contract on the effective date of termination, so that there is no interruption of insurance
Good to know : the bank cannot in any case take cancellation fees from you, increase your borrowing rate or even charge study fees for the comparison of guarantees.
How to effectively compete for borrower insurance?
Several options are available to you to find the most advantageous borrower insurance contract in terms of price and guarantees. You can use a broker, ask your usual insurer, or use a online comparator to access the best mortgage insurance offers at a glance.
We recommend that you use an online simulator because it has many advantages:
- Free, fast and easy to access without any commitment
- Clear display of the main guarantees and their coverage rate
- Total cost of borrower insurance in euros
- TAEA (Annual Effective Insurance Rate)
To effectively play the competition, you must of course compare the total cost of borrower insurance and the TAEA, but also guarantees. For example, check the clauses of the job loss guarantee, or the different disability rates (the lower they are, the more you are covered).
Finally, be sure to check two very important points in the new borrower insurance contract before going to the competition:
- The waiting period : this is the time interval during which you are not guaranteed even though the insured event is included in the contract
- The age limits : some contracts are cheaper, but turn off when you turn off a certain age
Our advice: a new borrower insurance, taken out in delegation, can save you hundreds, even thousands of euros, during the life of your mortgage, do not hesitate to compare!