By Charlotte GAUCHON
17 April 2025
Mortgage borrowers are very familiar with creditor insurance, which is often seen as a simple formality when taking out a loan. But this is a simplistic view. This complex contract deserves special attention, both during its term and when it is terminated. Special features of loan insurance Loan insurance is a unique legal arrangement. It is based on a tangle of contractual relationships between three parties: the insurer, the credit institution (policyholder) and the borrower (policyholder). This contractual triangle explains the complexity of the applicable legal regime. The Court of Cassation has confirmed the existence of a direct contractual link between the insurer and the member, despite the intervention of the underwriter (Cass. 1re civ., 7 June 1989, no. 87-14.648). The originality of this construction does not end there: the credit institution plays a dual role. Initially the underwriter of the group policy, it generally becomes the beneficiary designated by the policyholder in the event of a claim. This makes for a tricky legal analysis. The...
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