Lack of group insurance membership and lender’s duty to advise

The facts : An individual takes out several real estate loans with a bancassurance company to finance the acquisition and renovation of several rental properties. However, he does not comply group insurance proposed by the lender. A memorandum of understanding for the restructuring of all loans is concluded between the borrower and the bank. A few years later, the debtor was placed on sick leave after suffering from a degenerative disease. Allocates the bank responsibility by reproaching him for not warning him of the risks to which he would be exposed if he did not take and insurance for death, disability and incapacity for work total work. His request was rejected and he appealed to the Court of Cassation.

Decision: To exclude the bank’s liability, the Court of Appeal stated that sp information obligation the lender on the scope of the insurance assumes that the borrower signs up for the group insurance offered by the lender. Then, after noting that the credit agreements in question contain information about the group insurance taken out by the bank and the borrower’s ability to take out an equivalent guarantee with the insurer of his choice, he considers that the borrower confirms that he was informed of the terms and conditions of the group insurance and knowingly waived his membership.

Comment : The Court of Cassation condemns the Court of Appeal. According to the judges, the bank should have warned the member about the risk of not taking out group insurance: “Thus, with this decision, on the one hand, that the bank that provided loans accompanied by a proposal to join a group insurance contract, was obliged to inform him, in the event that the borrower did not comply with this insurance, of the risks of defaulting on the insurance with regard to his personal situation and on the other party that it was up to the bank to prove that it fulfilled this obligation, the Court of Appeal violated § 1353 and § 1147 of the Civil Code ».

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