Before concluding an insurance contract, many businesses or individuals seek a close relationship with an intermediary who can advise them on the best product at the most advantageous price and assist them during the contract. Our legal expert takes a closer look at this contractual relationship. What is the responsibility of the insurance broker?

Definition of Insurance Broker Responsibility

An insurance broker is an intermediary in insurance or reinsurance who connects insurance policyholders with insurance companies or reinsurance companies, without being bound by them.

To operate in Belgium, the broker must be registered in the insurance intermediaries register and have the required professional knowledge.

Furthermore, they must have sufficient professional integrity, adhere to an extrajudicial complaint handling system, and take out professional liability insurance.

Obligations

The broker has a duty of information and advice towards their client.

In order to provide useful advice to their client, the broker must gather information from them and particularly understand their requirements and needs.

They must also ask any useful questions of their client regarding the subscription to an insurance policy.

A broker commits a fault if they merely propose to their clients the subscription to an insurance policy with an unknown company, without drawing their client’s attention to the risks and pitfalls of this coverage.

Conversely, the broker will not be liable, for example, for not drawing their client’s attention to certain clauses when they are clear and intelligible.

The broker also has a duty of advice towards their client.

The broker’s duty of advice consists of guiding the client in the choice of one policy over another, with one company or another, after providing the client with all necessary information and conducting a comparison of the costs and merits of each policy considered.

For example, in the context of a “life” product, the broker is only responsible if the investment were to necessarily lead to heavy losses, regardless of economic circumstances.

In any case, the broker can never be held responsible for intentionally inaccurate statements made by the policyholder when subscribing to the contract.

Responsibility

It is generally considered that the information and advice duties of the broker constitute obligations of means and not obligations of results, which will have an impact on the burden of proof.

In case of dispute, it will be up to the insured who believes they have been poorly informed and/or advised by their broker to demonstrate the fault of the latter but also to establish that they have suffered damage and especially that there is a causal link between the breach and the damage.

It is up to you, therefore, to demonstrate that your choice would have been different if you had been properly informed by your broker.

The insurance contract is a consensual contract, meaning that the contract is formed by a simple exchange of consent. However, the policyholder and the insurer will always have an interest in having a written document as proof, especially if a dispute arises. Our legal expert discusses the three methods generally used to conclude an insurance contract.

Pre-signed policy for subscribing to an insurance contract

A pre-signed policy is an insurance contract previously signed by the insurer and containing an offer to contract under the conditions described therein.

This type of subscription is generally only used for specific insurance contracts, where the nature and/or description of the risk are not significant (for example, legal protection insurance). In the case of a pre-signed policy, the contract is formed upon the policyholder’s signature.

The coverage starts the day after the insurer receives the policy, and this date must be communicated to the policyholder. Both parties have the right to terminate the contract within 30 days after receiving the policy, with immediate effect if terminated by the policyholder and within 8 days after notification if terminated by the insurer.

In practice, this means that if your insurer notifies you of their intention to terminate on December 31st, the termination of the contract will occur on January 8th, and you will no longer be covered from January 9th.

Insurance application

An insurance application is a document by which the insurer, at the request of the policyholder, temporarily takes on the risk. The law states that the contract is formed upon the policyholder’s signature of the document, subject to the possibility of termination within 30 days for contracts exceeding 30 days.

Insurance proposal

An insurance proposal is a document issued by the insurer, to be filled out by the policyholder, intended to inform the insurer about the nature of the operation and the facts and circumstances that are relevant for assessing the risk.

This proposal does not bind either the prospective policyholder or the insurer. If, within 30 days of receiving the proposal, the insurer has not notified either an insurance offer, a request for investigation, or a refusal to insure, they are obliged to conclude the contract under penalty of damages.

If the insurer, upon receiving the proposal, sends an insurance offer to the prospective policyholder, this offer becomes irrevocable either for the specified period or at least for a reasonable period.

In case of acceptance, the contract is formed upon the insurer’s receipt of this acceptance, meaning when the insurer receives back the policy signed by both parties.

Since June 1, 2015, a federal consumer mediation service has been established within the FPS Economy to handle any request for out-of-court resolution of consumer disputes. We’ll briefly look into the competencies of this service, which could be useful to you, especially in case of disagreement with your credit institution.

Competencies of the Federal Mediation Service

As a preliminary matter, a contact point is established within the Mediation Service to inform you of your rights and obligations, particularly regarding existing procedures for out-of-court resolution of consumer disputes.

Any request for out-of-court settlement of a consumer dispute can be submitted free of charge to the Consumer Mediation Service by letter, fax, email, or in person.

Upon receipt of your request, the Mediation Service forwards it to the competent qualified entity or handles it itself when the request concerns a consumer dispute for which no qualified entity is competent.

The Mediation Service may refuse to process your request if the complaint is frivolous, defamatory, anonymous, or has already been subject to legal action. It may also do so if the complaint has not been previously lodged with the concerned company, or if it has been but more than a year has passed.

This will also be the case if the complaint has already been handled by a qualified entity, including if it has refused to handle it, and when the complaint has been or is already subject to legal action.

Decision

The Mediation Service will inform you within three weeks of receiving your request of its decision to proceed with or refuse the processing of your request. In case of refusal, the decision must be justified.

Within 90 calendar days following the receipt of your request, the Mediation Service will inform you of the outcome of the dispute resolution. This deadline can be extended once for an equivalent period. Moreover, this extension must be justified by the complexity of the dispute.

When the Mediation Service achieves an amicable settlement of the dispute, it closes the file and sends confirmation in writing or on another durable medium to the parties.

If an amicable settlement cannot be reached, the Mediation Service informs the parties in writing or on another durable medium and may simultaneously make a recommendation to the concerned company, with a copy to you.

If the concerned company does not follow this recommendation, it has a period of thirty calendar days to provide its motivated position to the Mediation Service.

Recommendations

When a disagreement arises between you and your credit institution, you must first submit your complaint to them.

Then, if your complaint is not resolved with this financial institution, you can contact the Consumer Mediation Service, which will be obliged to handle your request confidentially.

No one can accurately predict the rise or fall of interest rates. The only certainty is that in this year 2015, it is good to buy, to build, or simply to renegotiate your mortgage. Fixed or variable rate? Over 20 or 30 years? With equity or with a guarantee? We inform you about the tips and tricks to obtain a mortgage from your financial institution.

Principle of the mortgage loan

Obtaining a mortgage loan will depend on two essential conditions. On one hand, the ratio between the value of the property and the amount to be borrowed which cannot exceed 80%. This difference will represent the equity contribution. On the other hand, the ratio between expenses and the income of your household which must average 33%. Consequently, the amount of your monthly payment cannot exceed one-third of your monthly income.

The ideal profile

Each lender has its own policy regarding the granting of loans. However, a couple who have job security, meaning both have indefinite contracts and at least 20% equity, will have less difficulty obtaining their loan. The existence of personal security is also a significant factor that will be taken into account, as well as the absence of current loans.

The best interest rate

If current rates are attractive, be aware that these low rates sometimes come with high prices for land and houses. Therefore, make sure to conduct a thorough analysis of the real estate market before committing and consult several financial institutions to leverage competition. You have the opportunity to showcase your commercial acumen and negotiation skills. You can, of course, prefer to use the services of a broker (www.cpe-credit.com).

If the fixed rate formula allows you to know in advance the amount of your monthly payment throughout your loan, the variable rate may hold surprises for you. This is a matter of personal choice and financial literacy, knowing that if your repayment capacity is good, the risk of the variable formula is greatly reduced.

However, note that a mixed formula combining fixed and variable rates is also possible. Do not overlook ancillary products, such as a balance due insurance, which can be useful in case of death, incapacity to work, or disability.

Repayment difficulties

Three solutions are available to you: renegotiation for a reduction of the initial rate, temporary suspension of capital repayment, or extension of the credit duration.

What CPE Offers You

At CPE, we offer you the best market conditions with preferential rates starting from 2.10%. Come discover our mortgage credit solutions to finance the house of your dreams or to carry out your renovation work.

It is common for borrowers to decide to repay their credit, in whole or in part, in advance, for various reasons. In such cases, they may be liable for a prepayment penalty. Our legal expert examines the ins and outs of this penalty.
Simulate your loan online

Concept of a prepayment penalty

The prepayment penalty corresponds to the difference between, on the one hand, the interest that the bank would have received until the end of the credit if the credit had not been repaid in advance and, on the other hand, the interest it can earn by reinvesting the capital repaid in advance in the interbank market.

Indeed, in the event of early repayment, the lender recovers the capital but will no longer receive interest.

Therefore, it will incur a loss of income for the remainder of the initial loan term.

To compensate for this loss of income, the lender will request from the borrower a prepayment penalty in lieu of the capital.

Mechanism

The law provides that in the case of total or partial repayment of an interest-bearing loan, a prepayment penalty of an amount greater than 6 months’ interest calculated on the amount repaid at the rate set by the agreement cannot be claimed from the debtor, regardless of the capital repaid and the accrued interest.

In practice, the lender will include a standard clause in the loan agreement stating that the penalty cannot exceed 1% of the capital repaid in advance when the contract still has more than one year remaining, or 0.5% of the capital repaid in advance when the contract still has less than one year remaining.

The prepayment penalty cannot exceed the interest you would pay if you did not repay in advance.

If you repay in advance during a period when the debit rate is variable, the lender cannot claim a prepayment penalty from you.

The consumer is free to repay all or part of their credit at any time in advance.

To do so, they must notify the lender of their intention by registered mail at least 10 days before repayment.

Within 10 days of receiving the consumer’s letter, the lender will inform the borrower of the amount of the penalty claimed on a durable medium (regular mail, email) and specify the calculation of the penalty.

Legally, it is the landlord’s responsibility to carry out renovation and compliance works in the leased building. Under certain conditions, the law allows the tenant to carry out these works themselves. It is not uncommon for tenants to apply for a loan to expand the bathroom or renovate the fireplace of the house they have been renting for several years. Let’s see how this contractual relationship materializes in practice.

Concept of Tenant Lease

The renovation lease is a modality of the main residence lease. It is a contract whereby, in exchange for the tenant’s commitment to perform certain works, the landlord grants them one or more benefits for a specified period (which can exceed 9 years):

• Either waive the right to terminate the lease;
• Or waive the right to request rent revision;
• Or grant a reduction or waiver of rent;

Nature of the Works

The works referred to by the legislator are of any type except those which, under the law, are the responsibility of the tenant. Generally, this includes renovation works, major repairs, and compliance works on the leased property.

This last scenario will allow the tenant to temporarily inhabit a non-compliant building.

Formalities

An oral agreement is insufficient. The law requires a written agreement between the parties, which can be made at any time during the ongoing lease. It is therefore entirely possible to modify a main residence lease into a renovation lease.

The contract must also stipulate that the tenant undertakes, at their own expense, to carry out specified works in the leased property and set the deadline for the completion of these works. In addition to its duration, the contract must mention the consideration provided by the landlord.

Regarding works to bring the leased property into compliance with basic safety, health, and habitability requirements, the law imposes additional conditions.

These conditions include a precise description of the works, a reasonable deadline for starting the works, and no rent being payable during the agreed duration of the works, provided that this duration cannot be shorter than reasonably necessary to complete them.

Furthermore, the landlord must concede at least one additional commitment besides those mentioned above, usually refraining from terminating the lease.

Finally, at the request of the most diligent party, there will be a joint inspection of the works upon their completion. This way, the landlord can ensure that the agreed works have been properly executed.

Recommendations

Although the formula is attractive for both parties, offering significant benefits for the landlord against free occupation for the tenant, caution is still required.

Firstly, do not forget to take out insurance for works of such magnitude because only your liability may be incurred if necessary.

As it is a lease, the landlord can terminate it at any time, with a 3-month notice, for personal occupation, for example. Therefore, make sure to include a clause that provides for reimbursement of the cost of the works if the lease is terminated within a timeframe coinciding with the completion of the works.

Conversely, if you leave the premises and the works are not completed, you may be liable to compensate the landlord for the value of the unfinished works.

You have modest income and you are having difficulty obtaining a classic mortgage loan. Don’t panic, the social mortgage loan “housing for all” is designed for you. Our lawyer explains the benefits of such a loan.

Social Mortgage Loan Concept

The social mortgage loan is a loan granted by the Walloon Society for Social Credit to finance the construction or purchase of a first home in the Walloon Region, intended for the personal use of the borrowers.

Simulate your loan online

Grant Conditions

As with any loan application, the lender will conduct a thorough examination of your solvency based on the information collected in the credit application form. You will need to prove your identity (adult) and provide proof of your net monthly income.

If necessary, the lender will consult the Central Credit Register. The monthly repayment of the mortgage loan cannot exceed one-third of the borrowers’ net monthly income.

Your annual income cannot exceed €53,000. You will also need to provide the title deed or the sales agreement of your home. The market value of the home must be less than €204,000. An expert will be appointed for this purpose if necessary.

The regulation applies to any building used for residential purposes. The area of the premises used for professional purposes cannot exceed 20% of the living area.

The loan term ranges from 10 to 30 years, with the mortgage loan to be fully repaid by the age of 70. The applicable interest rate will correspond to the scale of the corresponding income category. Rate reductions are possible in areas designated as real estate pressure zones, revitalization zones, or for the purchase of social housing.

Once the file is complete

it receives a registration number. The credit contract must be signed within 100 days of the registration date.

Mortgage loans are repayable in constant monthly installments. A deed of assignment of debt must be granted in favor of the lender.

The borrower will be required to insure the home against fire and to take out a remaining balance insurance.

If the loan is intended to finance renovation or other works, they must be completed within two years of signing the contract.

If you wish to sell your home, you must fully repay the loan amount. A re-employment indemnity of three months’ interest will be due on the capital repaid early.

Formalities

All applications must be submitted to a social credit desk of the Walloon Society for Social Credit.

The processing fee is around €25. You should also expect to pay €260 for the home appraisal. These amounts will not be refunded if the loan application is rejected.

In addition, a solidarity contribution to the Walloon Region of 0.20% of the loan amount is required. Any loan modification in progress also incurs a fee of €150.

Appeals

If the Walloon Society for Social Credit refuses the requested loan, you have a period of 30 days to submit a written appeal to the President of the Board of Directors of the SWCS.
Simulate your loan online

From January 1, 2016, only renovations of private homes over 10 years old will still benefit from the reduced VAT rate of 6%. If your home’s age is between 5 and 10 years, don’t delay in taking out a renovation loan to take advantage of this favorable measure, which our lawyer outlines the application conditions.

Beneficiaries of 6% VAT for Home Renovation

The law targets anyone who holds either a real right (ownership, usufruct, emphyteusis) or a right of enjoyment (tenant) on the property.

Conditions

The building, once the work is completed, must be used exclusively for private housing.

In the case of mixed use (private housing and professional activity), two scenarios must be distinguished.

Either the private use is dominant, in which case the reduced VAT rate of 6% applies uniformly.

Or the private use is not dominant, in which case the VAT rate of 21% applies to the professional part and the VAT rate of 6% applies to the private part.

Under the current legislation, the work must be carried out on a private home that is at least 5 years old. This threshold will be increased to 10 years from January 1, 2016. Secondary residences are included.

The real estate operations covered include transformation, renovation, rehabilitation, improvement, repair, or maintenance (excluding cleaning) of all or part of a property, including materials provided by the contractor and the provision of personnel.

The following are also considered to benefit from the favorable rate: installation of heating, sanitary installation, electrical installation, installation of shutters, installation of stoves, radiators, individual wood, coal, oil, gas or electric convectors (this list is not exhaustive).

Formalities

To benefit from the reduced rate, you will need to provide an invoice from your contractor with the description of the materials supplied and the services performed.

Indeed, the reduced rate does not apply to work carried out by the owners themselves.

Any other document proving the private use of your property (property deed, lease contract) will also help cover you in case of a VAT administration check.

The legislator has decided to significantly modify the law on consumer credit to protect consumers and prevent them from falling into over-indebtedness. Here is an overview of the major changes that have taken place since April 1, 2015.

1. The burden of proof is on the lender

It is now up to the lender to demonstrate that they have asked the necessary questions to assess the borrower’s solvency and that they have verified that the consumer was indeed able to meet their “future” commitments.

The lender is also required to re-examine the borrower’s solvency each year based on a consultation of the Central Credit Register. This re-examination also applies to guarantors who undertake to repay the loan if the consumer defaults.

The burden of proof that the consumer had a free choice in relation to the conclusion of any ancillary service contract (for example: a remaining balance insurance) concluded at the same time as the credit contract also falls on the lender, or the credit intermediary.

2. Ban on soliciting

Lenders are prohibited from soliciting door-to-door or sending unsolicited credit offers to consumers. The only exception provided by law is if the lender or credit intermediary visits the consumer’s home at the consumer’s express and prior request.

In addition, the lender may not establish sales points to conclude credit contracts in public places such as train stations or metro stations.

3. A standard credit application form

Whenever your credit amount exceeds 500 euros, the lender or credit intermediary is required to submit a credit application form or, if applicable, an information request form.

From now on, this form is standardized, meaning that the questions included are the same for everyone and must relate specifically to the purpose of the credit, income, dependents, and current financial commitments.

4. Central Credit Register’s globalized response

When a credit intermediary receives a credit application for which they must perform intermediation acts, they may request the lender or credit insurer to consult the Central Credit Register. The lender’s response is said to be globalized, meaning that the information provided to the credit intermediary can only concern the number of credit contracts and the sum of the recorded credit amounts.

The credit intermediary cannot in any case ask the borrower or, if applicable, the person providing security, to exercise their right of access to the Central Credit Register in order to communicate the response obtained.

5. Approval and registration procedures for lenders and credit intermediaries

The approval and registration procedures for lenders and credit intermediaries are changing. It is no longer the FPS Economy but the FSMA that becomes competent in this area. However, the lender is still obliged to submit their contract model to the FPS Economy for approval.

Strict conditions are imposed on credit intermediaries, such as professional liability insurance, mandatory membership with a mediation service, and knowledge and training requirements.

6. Mystery shopping

The FPS Economy may appoint members of its staff or third parties mandated by it to visit credit companies, posing as clients or potential clients, without having to disclose their status as FPS Economy agents or third parties mandated by it and without having to specify that the information obtained during this visit may be used by the FPS Economy for the purposes of exercising its control. Prudence is therefore advised!