Borrower insurance allows people who take out a loan to guarantee the repayment of the latter with their bank. If an individual finds himself unable to repay his loan due to a serious accident, job loss, death or other unforeseen event, he can assure his bank that it will not suffer the financial consequences. In the law, the borrower can choose his insurance as soon as he has taken out his credit. But above all, he can decide to change borrower insurance throughout the duration of his loan. The conditions for authorizing this change, known as delegation of insurance, are detailed below.
What do the Hamon law and the Bourquin law allow?
Since the Hamon, which came into force in 2014, a borrower who has taken out a loan has the possibility of changing borrower insurance within 12 months of taking out a loan. Beyond the 12 months of termination made possible by the Hamon law, the Bourquin law extends the authorization of termination and delegation of insurance: it is possible to terminate an insurance contract every year, on the anniversary date of signature of this contract. This means that as a borrower, it is possible for you to reconsider your decision if you have found insurance that is more advantageous for you, even if you are committed to another contract. This insurance substitution has no financial impact and does not generate any penalty for the borrower.
What are the conditions for changing borrower insurance?
To change the insurance contract, the bank must accept the new contract to which you want to subscribe. Make sure, before sending your request, that your new subscription meets all the necessary conditions. First, your new borrower insurance must have the same characteristics as the one you signed at the start, that is to say that the level of guarantee must be equivalent to that offered by your bank insurance. Then, remember to initiate your steps before the deadline stipulated by law, namely before 12 months of contract (Hamon law) or at least two months before the anniversary date of signature of the initial contract (Bourquin law).
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What are the steps to follow ?
After verifying that the conditions are met, the insured must begin by taking out a contract with the new insurer. The most important thing when choosing a new insurer is to check first of all that the new contract offers the same levels of guarantee. If this is the case, the insured will send his new insurance contract to his bank so that the latter can validate or refuse the contract substitution. The bank has 10 days to communicate its choice after receipt of the file. It will then be necessary to send the former insurer a registered letter, completed by the insured, in which will appear: his decision to terminate his initial borrower insurance contract, validation from his bank, and the effective date of start of new contract. Sometimes the new insurer organization offers to pay for the sending of this letter, but it is possible that the insured must take the steps on his side. Within the framework of the Hamon law, this termination letter will reach the former insurer at least 15 days before the twelve-month period has elapsed.
What happens if the borrower has already paid his annual fee for his old contract?
If the lender has validated the termination request, the insured will have the option of receiving a reimbursement pro rata for all the months for which he will not be insured.
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