NULLITY OF INSURANCE POLICIES LINKED TO MORTGAGE LOANS

Nullity of insurance policies linked to mortgage loans: What needs to be known?

Insurance policies linked to mortgage loans are a common option offered by banks or financial institutions when granting a mortgage loan. However, in some cases these insurance policies may be void, which can cause problems for borrowers.

This article explains what the nullity of insurance policies linked to mortgage loans is, what reasons may give rise to it, and what actions can be taken by those affected.

What is the nullity of insurance policies linked to mortgage loans?

The nullity of an insurance policy linked to a mortgage loan means that the insurance contract has no legal validity. This means that the borrower is not obliged to pay the insurance premiums and that the bank or financial institution cannot require its arrangement as a condition for granting the loan.

What reasons can give rise to the nullity of insurance policies linked to mortgage loans?

There are different reasons that may give rise to the nullity of insurance policies linked to mortgage loans, including:

• Lack of information: The bank or financial institution has not provided the necessary information about the insurance linked to the mortgage loan, such as its conditions, costs, or consequences in the event of non-payment.
• Abusive nature: The insurance linked to the mortgage loan contains abusive or disproportionate conditions, which may create an imbalance in the relationship between the borrower and the financial institution.
• Lack of transparency: The bank or financial institution has not fulfilled its obligation to inform the borrower about the nature, content, and consequences of the insurance linked to the mortgage loan.
• Mandatory tying: The bank or financial institution has imposed the arrangement of the insurance as a mandatory condition for granting the loan, without giving the borrower the option of taking out external insurance.

What actions can be taken by those affected by the nullity of insurance policies linked to mortgage loans?

Those affected by the nullity of insurance policies linked to mortgage loans can take different actions, such as:

• Out-of-court claim: It is possible to file an out-of-court claim with the bank or financial institution to request the refund of the premiums paid for the insurance and its cancellation.
• Legal action: If a satisfactory response is not obtained from the bank or financial institution, it is possible to file a lawsuit to request the nullity of the insurance and the refund of the premiums paid.
• Complaint to the Customer Service Department: A complaint can also be filed with the financial institution’s Customer Service Department or with the Customer Protection Service of the Bank of Spain.