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New Rights on Car and House Insurance

Tuesday 08 October 2013

New legislation is being introduced making it easier for consumers to change their car and house insurer, which may well lead to a fall in insurance premiums.

The projet de loi de Consommation 2013 currently making its way through the legislative process in France introduces a range of new and reinforced rights for consumers.

Amongst the measures is a right for consumers to terminate their car and house insurance policies at will after the expiry of one year of the contract.

The right of termination must be without charge and with full reimbursement of any unexpired premium.

At the present time car and house insurance policies are tacitly renewed each year, unless within the two months preceeding the renewal date of the policy it is terminated by the insured person.

In order to remind you of the renewal, since 2008 insurers have been obliged to give you due notice of the prospective expiry date of the contract.

If the notice advising you of your right of termination is received less than 15 days before the final date allowed for termination, or after the date within which you are entitled to terminate, you are granted a further period of 20 days to terminate the contract.

However, the law is complex and poorly understood and is probably one reason why the French change their insurers far less than elsewhere in Europe, something that may well now change.

The hope amongst consumer groups is that if it becomes easier to terminate an insurance policy competition will become fiercer, which in turn should mean that premiums will reduce.

Insurers dispute this will occur as they consider that with greater instability in the market it will increase their costs, which is likely to eventually feed through into higher insurance premiums.

The early indications are that certain insurers are either reducing their rates or holding them stable.

One consequence of the new rule is likely to mean more consumers will make use of the internet to obtain their insurance policy, and this in turn is likely to drive competition.

Just how the new law will operate will be set out in regulations to be drafted, so it is likely that a measure that is clear and simple in primary legislation will become monstrously complex and more limited once the fonctionnaires have finished with it. A suivre.

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