Banks do not respect the principle of insurance delegation.
Effective on September 1, 2010, the Cogilaw Company allows borrowers to opt for the loan insurance delegation principle. However, although advantageous for borrowers, this device seems little exploited. Indeed, according to a recent opinion of the Advisory Committee of the Financial Sector (CCSF), only 1 borrower out of 10 benefits from the delegation of credit insurance.
Save with the loan insurance delegation
89% of borrowers purchase their insurance from the lending institution. However, there is a real opportunity with the borrower insurance delegation to benefit from a more advantageous insurance in terms of tariffs and guarantees than the group contract of the lending bank.
Insurance delegation is the taking out of its insurance loan with the insurer of its choice. The bank can not oppose it if the level of the guarantees is at least equivalent to that of the group contract that it proposes and must motivate any refusal in writing. Since the cost of insurance can represent up to 20% of the total cost of a home loan, choosing cheaper insurance can save a lot of money.
Simulation, Quote and Comparison of Credit Insurance
Borrower insurance: the standardized form
The lender is required to provide the borrower with a standardized form with the guarantees that the borrower requires to secure the loan. The standardized form allows the borrower to rely on the guarantees requested so that he can choose the cheapest insurance contract whose level of coverage corresponds to the lender’s requirements.
Bankers do not play the game of competition for insurance delegations
It seems, however, that some lending institutions do not play the game since they only provide the standardized form to the borrower too late. The borrower therefore has no time to compete and is forced to accept the lender’s group contract to obtain the requested financing.
Also, the standardized cards issued by the banks are often too complex and long for the borrower to easily perform a comparison of individual insurance offers. Banks are therefore invited by the CCSF to base the edition of their standardized form using the standard model provided for this purpose.
Delegation fees: a deterrent
The advice issued by the CCSF also points to delegation fees charged by lending institutions. Although some institutions do not put any delegation costs in place, others do not hesitate to overtax the loan secured by a loan insurance delegation. This practice allows the banks to exercise a deterrent power on the borrower and thus relinquish his willingness to subscribe a delegation of insurance.
In addition, some lending banks increase their rates when they are aware of the wish of the borrower to use the delegation of credit insurance while they are prohibited from making a rate increase when the borrower opts for the borrower insurance delegation.
Motivate any refusal in writing
The CCSF also wants the lending institutions to justify more precisely and clearly any refusal of loan insurance delegation. Also, this refusal must be expressed quickly so that the borrower can find another offer of individual insurance.
Use a real estate insurance broker
In order for you to exploit your borrowing rights and benefit from the best loan conditions, it is recommended that you use a loan insurance broker.
He will be able to inform you and advise on your credit operation. Going through a broker will save you time and allow you to be offered the best insurance deals he will negotiate for you.