Buyers in France can take out a type of insurance called a garantie revente that protects them against a drop in value of their property. We look at what this is and how it works.
A garantie revente, is taken out when a property is bought. The principle is simple: if you have to sell the property for less than the price you paid for it, the insurer will make up the difference – or at least some of it – so you do not lose as much money when selling the property.
Cover costs between €500 and €1,000 - paid up-front - and is mainly offered by brokers and La Banque Postale. Chubb and Nîmes-based Sada Assurances are the main firms working with brokers.
Un accident de la vie
Note that this insurance comes with a number of restrictions. The main one is that the decision to sell the property must be prompted by an external event – un accident de la vie.
This can include losing your job, a divorce, a death in the family, the birth of twins, or a sudden job transfer to a location more than 100km away.
If the property in question is rented out, the restrictions are tighter, and do not include the birth of twins or a job transfer.
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As the policy is mainly offered by brokers, some garnish it with more features. A firm called NousAssurons launched a garantie revente this year which offers cover for such eventualities as a motorway exit being built close by, or if a new TGV line, wind turbines or a cemetery lowers the price of the property.
Offers are time-limited, usually for between five and nine years. Time restrictions also commonly apply to the specific accident de la vie. In the case of a divorce, for example, the house must be sold within six months of the divorce being settled. For twins, the property should be sold within nine months of the birth.
Most policies also limit the loss of value they will cover, with a 20% fall in price common. The maximum amount insurers will pay out depends on the cost of the policy.
It is always recommended to read the small print thoroughly. Some garantie revente claims are invalidated if the owner turns down earlier offers at higher prices, for example. Others may have clauses relating to the age of the policy holder in relation to job-loss situations.
Some contracts also exclude twins where the birth involved medical help to boost fertility.
French insurance law does not usually allow people to claim on different contracts for the same event. In practice, this means that in the event of a death, for example, the policy holder might need to choose whether to claim under loan insurance or garantie revente.
However, if the situation arises where loan insurance specifies that payments on the property will continue, the garantie revente will remain in place until it either expires or the house is sold.
