# Is House Insurance mandatory from a mortgage perspective



## jim (1 Feb 2017)

I understand that house insurance is not a legal obligation - is this correct?

What about from the perspective of having a mortgage - do Banks oblige you to have house insurance?

I know that when drawing down you must have it but do you need to renew, do Banks monitor this and is there consequences for not renewing house insurance (from a bank/mortgage perspective)?

Thanks.


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## Monbretia (1 Feb 2017)

Not legally necessary but practically always a condition of a loan offer.

The consequences of not renewing are the bank might follow up, they will be notified by the insurer and most will at least send out a couple of letters to you.  The obvious consequences of not insuring are if for example the house burned down, you have no insurance and no property but still owe the money.   Now the bank is also at a loss as it would be a lot cleaner for them if you just had insurance to rebuild but they will chase you for the money owed and I suppose they have a site to sell if nothing else.

There is no doubt that a lot of people impacted by the recession and financial crisis did not keep up their house or even life insurance but it's not the ideal obviously and not something to be done lightly.   Theirs was a choice between food on the table or insurance!


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## Kimmagegirl (1 Feb 2017)

The bank will insist that you have fire insurance to cover the buildings. If you don't pay it, you will find that the Financial Institution will pay it on your behalf and debit your mortgage account with the cost.


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## jim (1 Feb 2017)

cheers both for the replies.

Is mortgage protection insurance which I am paying not sufficient with regard to protecting bank if house burns down or is that more in case I burn down?


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## Monbretia (1 Feb 2017)

I don't think banks take out insurance anymore on behalf of customers and debit your account, I could be wrong but I think that practice disappeared a long time ago.

Mortgage protection insurance - do you mean the stuff that pays out if you die or the stuff that pays out if you are out of work?   The term seems to be used to cover different things.

Either way neither of these are any good to the bank or you if the house burns down.


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## gipimann (1 Feb 2017)

My experience from approx. 5 years ago was that my mortgage provider (EBS) didn't get documentation from my home insurer (the document went missing, but I wasn't aware).   EBS threatened to arrange insurance and charge me for it if I didn't get the document for them to show that they were named as an interested party on my home insurance.


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## Steven Barrett (1 Feb 2017)

jim said:


> cheers both for the replies.
> 
> Is mortgage protection insurance which I am paying not sufficient with regard to protecting bank if house burns down or is that more in case I burn down?



Mortgage protection is life cover that will pay off your mortgage if you die. 

House insurance is a condition of the mortgage. You have to have cover for the rebuild value if it was burnt to the ground ie cover the cost of clearing the site and building a new house. 

When deciding whether you need insurance, look at the consequences of being uninsured. If your house burns down, you have a plot of land with no clothes, possessions or a home. You still owe the bank the money the loaned you. If you die, what do you care, you're dead. The bank will sell the property to get their money back. That scenario may suit fine for someone who is single with no dependents. 

There's lots of insurance cover you don't need (washing machine?) but house insurance is one that you should definitely have. The consequences of not having it is too great and it's not a good use of money to self insure. 


Steven
www.bluewaterfp.ie


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## jim (1 Feb 2017)

Thanks all.
My premium has gone up a lot this year and the factors I was given were reasonable so that's what got me thinking about whether or not I really needed it given that I was not obliged to have it.


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## Ravima (1 Feb 2017)

What would you do if the place sustained a serious loss - say €50K? Could you meet it from own funds? Insurance is cheap ..............................if you ever call on it.


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## Setanta12 (1 Feb 2017)

I always thought it a necessary evil .. .. .. until I had to make a claim against it.


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## ClubMan (5 Feb 2017)

jim said:


> Thanks all.
> My premium has gone up a lot this year and the factors I was given were reasonable so that's what got me thinking about whether or not I really needed it given that I was not obliged to have it.


If you have home insurance and/or mortgage protection life assurance through your lender then bear in mind that you can shop around for these elsewhere and may get better value with other providers.
You do not have to buy them from the lender.
Remember to insure for the estimated rebuilding cost and not the market value of the property.
And make sure to consider the cover details/policy details as well as the premium cost when shopping around.


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## Daffodil (7 Feb 2017)

I've had home insurance with different companies over the past few years.  However this year my mortgage company have come to me looking for proof of this as they say they had no record of it. I sent them a letter of indemnity from the insurance company, however they say that the rebuild value I have on the policy is below the recommended one (according to the Chartered surveyors of Ireland).  They are now adding on the cost of the insurance to my mortgage every month which they just take very month and I am now paying on the double which is causing me serious financial stress.  The policy they have put in place for me is very expensive and way above what I was paying and what other companies are offering but they are unwilling to budge.  

Am I obliged to go with their recommended rebuild value (which is close to what the resale value would be) or can I challenge it?


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