Specific rules apply for outstanding balance insurance as security for a mortgage loan taken out for the construction, purchase or conversion of an individual's own and sole home.
These rules also apply when a mortgage loan is taken out by a person who already owns another home:
- either in bare ownership following an inheritance or a donation by a natural person;
- or in full ownership, but you undertake to assign the dwelling or your rights relating thereto within two years of the conclusion of the insurance contract;
- or in usufruct, but you undertake to assign the dwelling or your rights relating thereto within two years of the conclusion of the insurance contract.
The insurer is obliged to provide you with certain Information (art. 213, law of 4.04.2014):
- the price
the insurer must divide the premium between the basic premium on the one hand and the possible additional premium on the other. An additional premium is, in fact, the insurer's factoring in of a higher risk of death given your state of health.
- the reason
an insurer who decides to refuse or defer insurance, to exclude certain risks from cover or to charge an additional premium must notify the prospective policyholder, stating the reasons for its decision.
in its letter, the insurer must also inform you of your right to contact the insurer's physician in writing, directly or through a physician of its choice, to find out the medical reasons on which the insurer based its decisions.
- where you can go in the event of refusal or excessive additional premiums
In its letter, the insurer must also mention that there is a Price Monitoring Office and indicate whether the proposed premium can be taken into consideration for the application of the solidarity mechanism by the Compensation Fund.
The "right to be forgotten" for certain pathologies
Please note! When you take out outstanding balance insurance, you are obliged to disclose your medical history (article 61 law 04.04.2014).
If you have experienced serious pathologies or are affected by a chronic illness, you must declare these to the insurer. However, after a certain period of time, the insurer cannot always take them into account in its risk assessment.
Which contracts are concerned?
Outstanding balance insurance contracts:
- to guarantee repayment of a mortgage loan relating to an individual's own home (article 224 law 04.04.2014);
- to guarantee repayment of a professional loan.
Which pathologies are concerned?
- For contracts taken out between 1 February 2020 and 26 November 2022, if you have been diagnosed with cancer after ten years from the date of successful treatment and if there is no relapse within this period, the insurer can no longer take it into account in its risk assessment. It can, therefore, neither refuse insurance nor impose an additional premium on account of this condition. (article 61/2 law 04.04.2014)
- For contracts taken out after 27 November 2022, this period has been reduced
- to eight years
- to five years for people who had received diagnosis before the age of 21,
- For certain types of cancer the standard period is reduced. The list of cancers for which the period is reduced are found in Annex N1 of the Royal Decree of 26 May 2019., i
- If you suffer from one of the chronic diseases listed in the reference grid (Annex N2 to the Royal Decree of 26 May 2019) and under the conditions laid down therein, your insurer may neither refuse insurance nor impose an additional premium (or only a capped additional premium) on you on account of this condition.
Do you disagree with the additional premium?
If you believe that the additional premium for this outstanding balance insurance is too high, there are various options available to you.
First of all: consult different insurers to get a quote that allows you to compare. You can do this yourself or through an insurance broker.
If you do not agree with the premium offered to you, you can notify your insurer. The insurer is, then, obliged to contact its reinsurer to re-examine your dossier.
If the reinsurer reduces the premium, the Insurer must apply the lower additional premium proposed by the reinsurer, if it decides to enter into the contract with you.
The Price Monitoring Office
The Price Monitoring Office (Bureau du suivi de la tarification) is responsible for verifying whether the proposed additional premium or the refusal to grant outstanding balance insurance is justified from both a medical and an insurance perspective.
The intervention of the Price Monitoring Office is free of charge.
If the conditions of admissibility of the case are met, the Price Monitoring Office makes a binding proposal within 15 working days: the insurer, if it decides to conclude the contract, must adhere to the proposal of the Price Monitoring Office.
The Compensation Fund
The Compensation Fund is a non-profit association made up of insurance companies and credit institutions. It is part of a solidarity mechanism put in place to allow people with high additional premiums to still have access to outstanding balance insurance.
It will intervene financially if the additional premium imposed is more than 125% of the basic premium but not more than 800% of the basic premium.
You do not have to submit a request to the Compensation Fund, as the insurance company will recover the amount directly from the Compensation Fund.