When taking out a real estate loan, you are almost always invited to take out borrower insurance. The cost of this varies depending on your age, your health or your professional situation. Some loan applicants may then decide to omit elements to pay less. A choice that turns out to be very risky.
If you have taken out a property loan, you have undoubtedly not escaped this: borrower insurance is almost a prerequisite for obtaining a loan. However, the practice of an extreme sporting activity, very physical work or even a health problem are all factors which can penalize the borrower with the application ofa strong premium for these risk-judged profiles. Some people might then be tempted to lie by hiding information.
A lie with very serious consequences
It’s extremely dangerous, it’s really better not to lie, warns Cécile Roquelaure, spokesperson for the broker Empruntis. When you make a false declaration to the insurance company, the insurer has the option of not covering your claim and not to return the contributions collected. Indeed, article L113-8 of the insurance code provides for the nullity of the insurance contract if it appears that the insured has provided deliberately false answers to specific questions. As part of borrower insurance, the insured may therefore not be covered in the event of a life accident.
Real estate credit: is borrower insurance mandatory to take out a loan?
Even more problematic, the nullity of your insurance contract can be opposed even if the incident in question has nothing to do with the false declarations, as provided in the same article L113-8 of the insurance code. The burden of proof, however, will fall on the insurer, who must demonstrate that the borrower deliberately lied in his declaration, and is therefore in bad faith.
So what are the false statements deemed intentional? On the professional plan, a person who ensures that they have a stable job while they are a temporary worker may be sanctioned, just like a person who fails to specify that they are in a trial period. Not declaring that you are off work when taking out insurance can also be detrimental. Borrowers completing a health questionnaire without indicating, for example, a heart condition of which they are aware may also be sanctioned.
Reduction of sanctions in cases of good faith
It sometimes happens that the borrower makes an error in his declaration, for example in the case where a question on the health questionnaire is not clear. Good faith can then be upheld. This is the case, for example, for a member declaring himself in good health because he was unaware of the consequences possible surgical operations, which he had not been asked to declare or even in a general way, because an insured person was not aware of the threats weighing on his health, details Richard Reek, lawyer in insurance law.
You still need to have completed a health questionnaire. Since June 1, 2022, the Lemoine Law has removed this questionnaire for all borrowers who take out a loan of 200,000 euros (per insured) provided that the credit is repaid before their 60th birthday.
Real estate loan: will you benefit or be a victim of the end of the health questionnaire?
In the event that the member’s bad faith is not established, article L113-9 of the insurance code provides that the omission or inaccurate declaration on the part of the insured does not invalidate the insurance. However, if the inaccurate information is noted before any claim, the insurer can choose to terminate the contract, or maintain it by increasing the insured’s premium. On the other hand, if the error is noted after the loss, the compensation is reduced in proportion to the rate of premiums paid compared to the rate of premiums that would have been due, if the risks had been completely and accurately declared.
Romain DESIGNOLLE
Romain Designolle graduated from the CFPJ in 2017. After experiences in the field of Sports and local news for regional dailies… Read more
MoneyVox / RD / February 2024