The Lemoine law for better mortgage insurance

The Lemoine law, in force since 1 June 2022, lets you switch mortgage insurance at any time, free of charge. This provision allows you to challenge your loan by putting competition to work and thus benefit from a better APCR (Annual Percentage Cost of Insurance). You must, however, ensure equivalence of coverage. The other advantage of this law is to offer better access to people who have been ill and were struggling to find a lender. Here is everything you need to know about the Lemoine law.

Switching credit insurance at any time, thanks to the Lemoine law

The Lemoine law of 28 February 2022, applied from 1 June of the same year, strengthened the legislation allowing borrowers to terminate a credit insurance contract. Until then, you had to wait for the contract’s anniversary date to change insurer. The law applies to all new loan insurance policies and, since 1 September 2022, to all ongoing credit contracts. In practice, you can now take advantage of this market liberalization by terminating your contract, without any deadline constraints to respect.

Applying the Lemoine law involves no cost to the borrower. Your lender or bank is not entitled to charge you file or processing fees.

The lender’s obligation to inform you of your right to terminate

A Senate amendment to the Lemoine law – law no. 2022-270 of 28 February 2022 – requires your lender to inform you of your right to terminate every year. You must also be informed of the cost of your loan insurance.

Article L313-8 of the Consumer Code specifies that any document related to a group insurance offer must be accompanied by:

• The price of the loan insurance;
• The standardized information sheet;
• A notice on the loan insurance.

Furthermore, in the event of a refusal to change insurance, your lender must justify its decision in an “explicit and reasoned” manner. Without a valid reason, it is liable to a fine of €15,000. It is also required to provide you with the amendment to the contract within 10 business days of the change request.

How to apply the Lemoine law to change your mortgage insurance?

If you have signed a mortgage but want to put your insurer in competition with other providers, you must act in three steps.

1 – Finding a better-offering lender

Before informing your current insurer that you are looking for better insurance, you should shop around with its competitors. The Lemoine law includes a coverage-equivalence clause for borrower insurance. This means you can only switch providers if their coverage is at least equivalent to, or better than, your current insurer’s. You cannot therefore settle for a better price alone. To compare the two policies, you must request the SIS (Standardized Information Sheet), which contains all the details of the contract.

2 – The termination request, accompanied by the competitor’s contract

Once you have found an equivalent or better offer, you must send the corresponding contract to your current insurance provider, along with your termination request. This can be sent by post, by a court officer’s deed, or by any other means provided for in the insurance contract.

At the same time, you must send an insurance substitution request to your bank.

Your recipient has 10 days to verify that the Lemoine law’s equivalence clause is indeed met. If it is, they are obliged to accept the termination of your contract. If the clause is not met, your current lender can refuse to terminate the contract.

3 – Signing the amendment to your bank’s mortgage contract

You must inform the new insurer of your bank’s decision by registered letter or registered email. An electronic registered letter (LRE) has the same legal value as a paper registered letter.

After accepting your termination, your lender again has 10 business days to send you the amendment changing your credit insurance.

How to respond to an unjustified refusal from your current lender?

If your bank refuses to terminate your contract, even though you are certain you meet the equivalence clause, you should contact your bank’s ombudsman to discuss an amicable settlement. If you used a broker, it is their responsibility to handle these formalities and ensure the Lemoine law is respected.

If you still cannot reach an agreement, contact a consumer association, which will advise you on your options. You can also contact the ACPR (Prudential Supervisory and Resolution Authority). Its role is not to settle the dispute but to sanction insurers who fail to comply with the Lemoine law, forcing them to reconsider their position and accept your termination. You can also take the opportunity to ask the ACPR for advice, and they will redirect you to a competent body for guidance.

The Lemoine law for former patients

The Lemoine law has also eased the right to be forgotten for former patients. Indeed, people who have suffered from a chronic illness or one liable to recur struggle to find lenders and suffer from prohibitive APCR (Annual Percentage Cost of Insurance) rates. This reluctance to lend concerns all chronic illnesses, including hepatitis C, as well as cancers.

An earlier provision already existed:

• patients over 18 who had recovered from cancer at least 10 years earlier, without relapse, were entitled not to mention this condition in their credit application file;
• patients under 18 benefited from a 5-year right to be forgotten.

The Lemoine law reduced the right to be forgotten for a mortgage to 5 years, regardless of the borrower’s age.

Removal of the medical questionnaire for any mortgage not exceeding €200,000

When a loan of under €200,000 is due to be repaid before the borrower turns 60, a provision of the Lemoine law allows them to skip the medical questionnaire. The cap is cumulative for a couple taking out a joint loan, raising the loan amount to €400,000.

Projected savings from the Lemoine law

The Lemoine law is expected to let borrowers save between €5,000 and €15,000 on their mortgage insurance. It therefore seems wise to regularly review your loan contract and compare it against competing offers.

Applying the Lemoine law should not lead to a price increase — quite the opposite. Its goal is to foster competition among the various lenders and insurers, for the borrower’s benefit.

The Lemoine law is easy to apply, which lets you use it fairly simply, without being a financing expert. So don’t hesitate to make competition work for you to lower the overall cost of your mortgage.