The mortgage is associated with compulsory insurance. The bank will require us to insure the property for which it has lent us money. We can buy such insurance from the bank or on the market. What will be more beneficial for us?
Bank or market?
Real estate insurance consists of several elements , an insurance specialist. Basic insurance covers walls and solid elements against fire and other random events. Solid elements are e.g. plasters, paint coatings, floors, doors and windows. In broader insurance we can cover movable property, i.e. everything that is not permanently attached, e.g. furniture, home appliances, clothing, etc. There is also the risk of theft as well as damage to a neighbor’s apartment, e.g. flooding as a result washing machine failure or overvoltage (liability risk). – The offer of constructing the package is really wide. We need to know that the bank will require from us only the basic version including solid elements – says Lewandowski. When signing the loan agreement, we will have to decide whether we want to buy insurance from the bank or choose a package ourselves from the widely available offers on our market. – Bank insurance is often twice as expensive as the one available on the market. Therefore, it is worth looking for other suggestions.
What about this assignment?
Regardless of where you buy insurance, in accordance with the provisions of the loan agreement, we must assign our policy to the bank. This means that in the event of a fortuitous event regarding basic protection, the compensation will go to the bank. – In the basic scope of insurance, first of all, the bank is protected, not the customer and it is worth being aware of it – explains Lewandowski. If the bank additionally sells the package to us, we must remember that it wants to earn on this product and will offer us options with the lowest possible loss ratio. It is also very important to remember to extend the insurance and transfer the assignment to the bank in accordance with the dates specified in the contract. If we do not do this, the bank may charge us a fine, and also insure the property, charging us with costs. In this case, we have no influence on the offer chosen by the bank and its price, and we will have to pay for it.
The scope of compulsory insurance required by the bank is very narrow and protects only walls and solid elements. Therefore, for our own safety, we should extend the scope of insurance to secure the remaining assets in the apartment. – The biggest risk, which unfortunately works, are flooding. Both those in which we are flooded, but also those in which we are flooding the neighbor . When choosing insurance, the time for which it is included is also important. We have a choice in policies from one to three years. – I am a supporter of annual insurance. Thanks to this, we can adapt insurance to the real value of the apartment and its equipment, which is changing. Thanks to this, our protection is real all the time. Specialists also pay attention to the choice of insurer. As they emphasize, the settlement of damages is a very important issue, and customers do not have access to this data. That is why it is worth talking to advisors who have access to information that is not made public, but is just about how companies eliminate damages. Often policy amounts differ by PLN 20-50, and they can save us a lot of nerves and lost time in the future.
One or two policies?
In the case of assignment of compulsory permanent insurance for the bank and extended housing insurance, customers face the dilemma of whether to take out insurance under one policy or under two. Some insurers allow us to separate the basic version from the extended policy, which we have to pass on to the assignment for the bank, and the remaining risks are for us and it is on one policy. However, there are companies where the risk cannot be separated with the assignment and then two policies are prepared: one for the bank and one for the client. The situation with a bank assignment is simple when virtually all the property is in a loan. The situation becomes more complicated when, for example, we have half of the property in the loan. – If, for example, we have property bought for PLN 300,000, and only 150,000 in a loan, we limit the mandatory assignment of basic insurance to the bank to the amount of the loan, depending on the company. However, in such cases a lot depends on the bank and the insurer. Some insurers may do so in one policy, while others will split insurance into two policies. However, some banks also require an assignment for the entire value of the property, not just the loan part. In this case, at the time of damage, only the loan value will go to the bank and the remainder of the compensation will be returned to the customer. It is worth remembering that in such a situation this process will take longer technologically – explains specialist.