Can a bank legally require you to take out loan insurance for a loan? In principle no, but be careful, there is a small nuance. She can’t do it legally but she can contractually. No legislation in France, nor indeed any directive at the level of the European Union, requires the subscription of loan insurance to an individual. Whether you are purchasing your primary residence, financing a new car, or investing in equipment for your business, the state does not require you to have any such coverage.
It is in reality on the contractual level that the balance of power is established since the bank, which takes a major financial risk by lending you funds, is legitimately entitled to require solid guarantees to secure its debt before validating your file. “ If you refuse to subscribe to it, the banker is within his strictest rights by simply choosing to reject your financing requestdeclares Stéphane Soudeix, president of Kereis France. Because the law protects its commercial freedom to lend or not “.
Insurance negotiable depending on the type of credit
If the principle of contractual negotiation remains identical on paper, the practice varies depending on whether we are dealing with real estate credit or consumer credit. In the context of real estate, theinsurance is required in almost all files: “The consumer benefits from major advances in the Lagarde law which allow them to freely choose their insurer rather than being subject to the bank’s group contract », Specifies the expert. Conversely, on the market consumer creditalternative competition is virtually non-existent.
Is insurance relevant for a consumer loan taken out with your bank? In the event of a serious loss such as disability or death, the absence of insurance blocks the repayment of the loan and exposes surviving relatives to prosecution or to the outright loss of the property purchased. “ Doing without it can only be justified if the borrower has immediately available precautionary savings, able to pay off the debt without jeopardizing the family heritage», Reveals Stéphane Soudeix.
Credit insurance: do a review every five years
It is up to the wealth management advisor or the banker to activate their duty of advice to guide the couple towards a distribution of shares that fits perfectly with the reality of salaries. For your part, do not hesitate to do a regular check-up depending on your professional and/or family development : the arrival of a new child, extended parental leave, a sabbatical year or a professional change… “ Reassess the adequacy of your borrower insurance contracts systematically every five years to immediately rebalance the insurance rate upwards on the head of the person who earns the best.advises Stéphane Soudeix.
