MOSCOW, may 12. /TASS/. The Ministry of justice proposes to consolidate the right of borrowers together with the early repayment of the loan to return the money for unused insurance. Notification of the elaboration of the relevant draft law published on the portal of normative legal acts.
Now, insurers typically deny citizens prematurely repay the loan, in return of the premium for the unexpired period of insurance noted in the materials of the Ministry of justice (despite the fact that the loan is fully repaid, the insurance of life and health of the borrower and of the collateral when the mortgage continue to operate – approx. TASS). The insurers denied on the basis of paragraph 3 of article 958 of the Civil code of the Russian Federation according to which in case of early termination of the insurance contract the insurance premium is not refundable unless the contract provides otherwise.
However, the borrower’s insurance is not an end in itself, according to the Ministry of justice: registration of loan and insurance for him he is viewed as a single transaction with one purpose – a loan.
“Insurance contracts have a strong security focus (insurance amount is determined based on the amount of credit, as the main beneficiary specified by the Bank, the validity of the contract of insurance is equal to the maturity of the loan)”, – stated in the materials of the Ministry of justice.
To secure the right to prematurely pay borrowers to return the money for unused period of insurance, the Ministry proposes to amend the civil code and laws on consumer credit and mortgages. Public consultation on the proposals runs until 24 may.
The position of insurers
Insurers support the initiative of the Ministry of justice, said the President of the Russian Union of insurers Igor Jurgens. In his opinion, this will reduce the number of complaints an insurance company, primarily for insurers of life policies are often sold with the loan.
Insurance is an additional guarantee of repayment of borrowed funds and it is logical that it becomes unnecessary, if the obligation to repay a loan is discharged, he said.
Now when you make a mortgage loan, the borrower shall insure the collateral (itself acquired property), without insurance, the Bank is entitled to refuse the loan. In addition, banks sell borrowers the insurance of life and health of the loan term – these policies are formally voluntary, but the failure of the borrower from personal insurance the rate on the loan may be increased. Also, when the mortgage often is issued title insurance – against risks of loss of property rights.