In France, mortgage loan insurance is not mandated by any legal text. However, banks almost systematically make it a requirement before releasing a loan. This distinction between legal obligation and contractual requirement creates a negotiation space that most rental investors underutilize, even though the regulatory framework has profoundly changed since 2022.
Bank Sanctions and the Lemoine Law: What Has Changed for Investors
The Lemoine law, which came into effect on September 1, 2022, allows any borrower to terminate their loan insurance at any time, without fees, for the entire duration of the loan. The only condition is to provide a contract that offers guarantees equivalent to those required by the bank.
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Figures published by the Financial Sector Advisory Committee (CCSF) in June 2024 illustrate the scale of the movement. Requests for insurance changes rose from about 198,000 in 2021 to over 496,000 in 2024, marking an increase of nearly 150%. Alternative insurers captured 17.48% of market share in 2024, compared to 16% three years earlier.
For a landlord repaying a loan over fifteen or twenty years, the ability to renegotiate borrower insurance during the loan transforms this expense into a lever for optimizing rental yield. However, the bank must comply with the legal framework.
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In the fall of 2025, the DGCCRF sanctioned four banking institutions for failing to comply with the legal deadline of 10 business days imposed for responding to a request for insurance substitution. These sanctions confirm that some lenders actively hinder change processes, which may lead you to learn more on the Immovalys site to compare available offers and assert your rights.
Required Guarantees for Rental Loans: The Minimum Banking Requirements Explained
Banks do not require the same guarantees depending on whether the financed property is a primary residence or a rental investment. This difference is rarely explained clearly.
For a rental purchase, the minimum coverage generally consists of two guarantees:
- The death guarantee, which pays off the remaining capital owed to the bank in the event of the borrower’s death, thus protecting the heirs from residual debt.
- The total and irreversible loss of autonomy guarantee (PTIA), which takes over if the borrower is permanently unable to engage in professional activity.
- The temporary incapacity to work guarantee (ITT), sometimes required by certain banks even for rental properties, although the rental income already covers part of the monthly payments.
The ITT is the point of friction. Some institutions systematically require it, while others dismiss it for rental investments, considering that rental income mitigates the risk. The requirement depends on each bank’s internal policy, not on a sector standard.
This lack of a uniform standard means that an investor can obtain very different conditions from one lender to another. Comparing guarantee requirements before signing the loan contract remains the most concrete maneuvering room.
Borrower Insurance Share: An Underestimated Parameter in Rental Investment
The share refers to the portion of the capital covered by insurance for each co-borrower. For a primary residence, banks push for 100% coverage per person. In rental investment, the logic is different.
A couple borrowing for a rental property can distribute the share (for example, 50/50 or 70/30) based on their respective incomes and financial risk. Reducing the share lowers the total cost of insurance over the loan duration, which directly improves the net profitability of the operation.
The Lemoine law has opened the possibility of modifying the share during the loan term when changing insurance, provided that the new distribution meets the minimum imposed by the bank. Field feedback varies on this point: some brokers report refusals to modify the share despite equivalent guarantees, which fuels disputes observed since 2023.
Non-Occupant Owner Insurance and Unpaid Rent Guarantee: Two Complementary Coverages
Borrower insurance protects the repayment of the loan. It does not cover the property itself or rental uncertainties. Two other contracts complement the arrangement for an investor.
Non-occupant owner insurance (PNO) covers damage to the building outside of occupancy periods (water damage during a rental vacancy, fire, natural disaster). It also acts as a supplement to the tenant’s insurance if it is insufficient or nonexistent.
The unpaid rent guarantee (GLI) covers unpaid rents in the event of tenant default. It typically includes coverage for legal procedure costs. The GLI secures the cash flow used to repay the loan, making it a logical complement to borrower insurance.
These three contracts (borrower, PNO, GLI) form a protection triptych. Available data does not allow for conclusions about an average claim rate in rentals, but recent trends show an increase in home insurance rates linked to climate risk, making PNO more expensive year after year.
Calculating the Real Cost: Borrowed Capital or Remaining Capital
The method of calculating borrower insurance premiums directly affects the total cost. Two methods coexist.
Calculating on the borrowed capital produces fixed monthly payments throughout the loan duration. Calculating on the remaining capital generates decreasing contributions, higher at the beginning and then increasingly lower as the loan is repaid.
For a rental investment, the second option may seem more advantageous on paper. However, it complicates long-term profitability projections since the amount of the insurance charge varies each year. Investors who think in terms of constant monthly cash flow often prefer the clarity of calculating on borrowed capital.
The choice between these two methods deserves a simulation over the actual loan duration, including any potential early repayment. An investor planning to sell the property after eight or ten years does not benefit the same way from a decreasing contract as a borrower who will go to the end of the twenty-five years.