Home insurance mandatory with a mortgage?

pasquale83

Hi, I have a mortgage with AIB. Just wondering if the annual home insurance is mandatory and in case I don't renew it is AIB entitled to withdraw the mortgage?

ash23

It'll state in your mortgage terms whether insurance is mandatory but it usually is.
The bank generally want a letter of indemnity from the insurance company stating that the banks interest in the property has been noted.

Not sure exactly what action the bank can take but I doubt they'd cancel the mortgage if someone refused to take out insurance.
More likely that they'd arrange the house insurance themselves and add on the cost to the mortgage repayments.
Best to shop around yourself and get the best deal than let that happen.

mugsymugsy

pasquale83 wrote: »

Hi, I have a mortgage with AIB. Just wondering if the annual home insurance is mandatory and in case I don't renew it is AIB entitled to withdraw the mortgage?

Pretty sure it's in the standard terms and conditions. My home insurance with a provider didn't lapse but the details of renewal were not passed onto bank and had the bank contact me pretty quickly letting me know. The other thing they quickly let me know is they could help get insurance sorted obviously at a higher cost.

jinkybhoy

I let me house insurance go by accident and mortgage company setup house insurance for me without contacting me - they said it's in the terms and conditions that they can do it. I was renting the house out but tenant didn't give me the warning letters.

pasquale83

jinkybhoy wrote: »

I let me house insurance go by accident and mortgage company setup house insurance for me without contacting me - they said it's in the terms and conditions that they can do it. I was renting the house out but tenant didn't give me the warning letters.

what bank? thank you!

jinkybhoy

pasquale83 wrote: »

what bank? thank you!

I was with the TSB at the time - we are talking 10-12 years ago!!

witchgirl26

It's generally mandatory. Insurance is there in case something happens and while you might be ok with taking the risk of bearing the costs yourself, realistically, the bank owns a portion of the house and has a right to insist on the risk being mitigated. I would just recommend shopping around and not automatically going with one that's being offered by the bank as they can be more expensive.

dennyk

Aside from the mortgage issue, home insurance is not something you want to be thinking about dropping to save money. You're talking about saving a few hundred quid a year at the risk of losing tens of thousands or even hundreds of thousands of euros if something bad happens. There are other places you should be looking at in your budget to cut back on first.

brightspark

ash23 wrote: »

More likely that they'd arrange the house insurance themselves and add on the cost to the mortgage repayments.

This is exactly what will happen, happened to me when a broker offered me a better deal and I agreed as long as he dealt with the EBS.

He didn't! and the next month a letter arrived advising me of the extra amount they would deduct every month to cover the insurance. As I was able to prove I had insurance they relented.

Mortgage paid off now and I still pay house insurance, it's cheap compared to the potential loss, unlike a lot of insurance people pay for without hesitation such as extended warranties and phone insurance which if you did loose you could probably pay for with just a few weeks wages, unlike a house!


Your life insurance is usually mandatory too! The bank always wants to get paid.