Lemoine Law and Termination of Professional Loan Insurance

Released in February 2022, the Lemoine Act aims to make the credit insurance industry more accessible. Mainly dedicated to individuals, this law also provides benefits to professionals. But in order to take advantage of it, the Lemoine Act imposes very specific conditions on companies.

What is the Lemoine Act on borrower insurance for businesses?

Proposed by MP Patricia Lemoine, the Lemoine Act was passed on February 28, 2022 and aims to reform certain aspects of the borrower insurance market. Thanks to that, it is now possible to cancel your insurance contract at any time. This only concerns mortgage insurance contracts that have been taken out to finance the acquisition of property for professional (offices, fixtures, shops, etc.) and personal use.

This provision entered into force on 1 June 2022 for loan offers concluded after the adoption of the law by companies. Former borrowers, for their part, have the option to terminate their contract as soon as they wish from September 1, 2022. It should also be noted that in order to terminate its mortgage insurance, the company is no longer required to send a registered letter with a receipt for the reception. You can therefore break your contract by simple mail or by e-mail. It is also possible to do it from your professional customer area, if the option is available.

The Lemoine law also means the abolition of all medical formalities for loans with an insured capital of up to 200,000 euros. For these profiles, you no longer need to answer a questionnaire or provide a medical examination to your insurance company. But it may still request information related to your lifestyle. This is, for example, whether you are a smoker or not.

Another aspect reformed by this law is the right to be forgotten. Borrowers who have a worsening health risk can afford not to disclose their situation if there is no recorded relapse during the last five years. Before the adoption of the law, this period was 10 years for insured persons over the age of 21.

Finally, the insurance company is obliged to notify the borrower of its right of termination each year. It must also tell the insured how to exercise this right. This information can be provided on paper as well as via e-mail or from the user area.

Under what conditions does the Lemoine Law apply to professionals?

For professionals, the credit insurance can only be canceled if the loan is taken out to finance a mixed property. This means that it will be used as a main residence, but also for commercial purposes.

In addition, the possibility of termination only applies to insurance contracts signed by natural persons. The offers subscribed by civil property companies are therefore excluded. The same applies to consumer loans. For redemptions and loan consolidations, this law only applies if all the loans meet the conditions set.

How do you cancel your pro credit insurance agreement?

Termination of credit insurance thanks to the Lemoine Law has no effect on your mortgage. Once the new insurance contract has been selected, you must send it to your bank. The level of guarantee for your new offer must at least correspond to what the old contract offers. You will receive a change to the loan offer within 10 days. That includes the new effective annual insurance rate. This takes into account the new insurance rate. You, in turn, must date and sign the addendum and then send it back to your bank.

After notifying the bank of your change of insurance, you must send your cancellation request to the previous insurance company.

“To help companies in this process, there are specialist brokers who take care of all the steps for the entrepreneur. You have the option to continue with simple mail or from the customer area. In addition, the new law allows policyholders to make significant savings on termination. It allows you to terminate your contract without costs or penalties. ” tells one of the managers of Reassure me.

This new provision encourages competition between insurance companies. It thus supplements the Lagarde Act, which was adopted in 2010, and which makes it possible to choose a different loan insurance than the bank that provides the loan. Thanks to these two laws, it is now easier to put several insurance companies in competition. You can compare the offers on the market or use an insurance broker if necessary to choose the most comprehensive or the cheapest.

The Lemoine Law gives you the freedom to terminate your current contract as soon as you have found a better, more economical proposal for your business, provided you respect the principle of equivalence of guarantees. In other words, the guarantees in the new contract must be equal to or greater than the one you wish to terminate.

In conclusion, thanks to these new reforms, the credit insurance market is more consumer oriented, even professional. They make it possible to bring competition into play and reduce the cost of credit, which is good news at a time when rates are rising.

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