Mortgage Insurance: What to Do If Your Application Is Denied?

Obtaining mortgage insurance is often a crucial step in carrying out a real estate project with peace of mind. But what should you do if insurers deny your application? 
 

A mortgage insurance application may be denied for various reasons, such as health issues, medical history, or factors related to the borrower’s profile—including age, occupation, or engagement in a high-risk activity. This situation can be difficult to handle, but there are solutions to consider.
 

1 Analyze the reasons for the denial: It is essential to understand the exact reasons why the loan insurance was denied. The Assurly broker recommends asking the financial institution in question for an explanation or consulting a broker who specializes in loan insurance to obtain detailed information.
 

2. Use a mortgage insurance broker: An experienced broker has a wide network of partners and can negotiate with insurers to find a policy that matches the borrower’s profile. Thanks to this expertise, the chances of finding suitable mortgage insurance increase significantly.
 

3 Opting for Delegation or Substitution of Insurance: Borrowers have the right to choose loan insurance other than that offered by the lending institution. Delegating (at the start of the loan) or switching (during the term of the loan) insurance can be an advantageous alternative, often more competitive in terms of rates and coverage. It is important to note that the bank offers group insurance with fixed coverage and terms. In contrast, an external insurance provider can offer coverage specifically tailored to the customer’s needs.
 

4 Learn about the AERAS agreement: In the event of health issues, the AERAS agreement (Insurance and Loans for Individuals with High Health Risk) can facilitate access to loan insurance for people considered to be at high health risk, but under specific conditions.

The Case of a Partial Insurance Denial
Sometimes, an insurer may partially deny an insurance application by applying a premium surcharge, a coverage exclusion, or other conditions. In this case, the borrower has two options:
• Accept the insurer’s terms
• Continue comparing offers to find the one that best suits their needs. 

In any case, the borrower can switch again at any time thanks to the Lagarde, Hamon, Bourquin, and Lemoine laws.