What happens to my mortgage is I drop my house insurance?

Tony EH

I'm thinking of getting rid of the house insurance this year. It's near €700 a year. It's ridiculous and we can't even get storm or flood cover for that. The house was destroyed by flood water in 2011 and we've been blacklisted, essentially, for claiming on it.

I rang around last year and pretty much got the run around from other brokers, saying that there was nothing they could do for a cheaper rate. Yet, I know other people on much lower insurance payments.

Thing is, do mortgage lenders care whether you have house insurance or not?

And what can they do if you don't?

Tony EH

Tony EH wrote: »

I'm thinking of getting rid of the house insurance this year. It's near €700 a year. It's ridiculous and we can't even get storm or flood cover for that. The house was destroyed by flood water in 2011 and we've been blacklisted, essentially, for claiming on it.

I rang around last year and pretty much got the run around from other brokers, saying that there was nothing they could do for a cheaper rate. Yet, I know other people on much lower insurance payments.

Thing is, do mortgage lenders care whether you have house insurance or not?

And what can they do if you don't?

I would definitely say they care. Your house is the asset they seize to get their money back if you can't pay. If your house was burnt to the ground and there is no insurance then they have no way of getting any money.

What they do about it I don't know

Are you down to the bare minimum for insurance. Maybe buildings cover only with no extras

Tony EH

At the moment it's theft and fire I think.

700 is just way too much for what we are covered for and I think it's basically gouging us, because we claimed in 2011.

Personally, I'd be shot of it in the morning. Or maybe just reduce it to fire.

dok_golf

Your mortgage provider ( at least mine does) requires proof of an existing policy. If not, they will organise one for you, generally at an exorbitant price.

bb12

i think there's some legal obligation to have it if you have a mortgage. the bank have an interest in your house if you've got a mortgage so they need to protect their asset. i know that when i change insurance companies and forget to forward the letter of indemnity to my mortgage provider, they usually get onto me within a week or two looking for it to ensure i've got insurance.

SteM

Tony EH wrote: »

At the moment it's theft and fire I think.

700 is just way too much for what we are covered for and I think it's basically gouging us, because we claimed in 2011.

Personally, I'd be shot of it in the morning. Or maybe just reduce it to fire.

But you claimed on it in the past. You can see that it is of some use at least?

SteM

dok_golf wrote: »

Your mortgage provider ( at least mine does) requires proof of an existing policy. If not, they will organise one for you, generally at an exorbitant price.

KBC were the same with us. We switched provider last year and had to send them proof that the house was still insured.

Bellview

Deleted User wrote:

What they do about it I don't know

Bank will call in what is outstanding in mortgage

Bellview

Deleted User wrote:

What they do about it I don't know

Bank will call in what is outstanding in mortgage

Tony EH

SteM wrote: »

But you claimed on it in the past. You can see that it is of some use at least?

Its "use" is not in question. Its cost is.

Avatar MIA

Your house will be insured. Whether you do it or the bank will do it and add it to your mortgage.

When you took out the mortgage one of the things you agreed to was to keep the house insured.

phormium

The bank won't call in the outstanding mortgage, while it is a condition of the mortgage same as life insurance I have never seen that happen over no insurance being in place.

That said it's important to have house insurance, realistically if the house burnt down then it's not so much that the bank are screwed as their security is gone, it's more you are screwed as you still owe the mortgage and have no house!

I would go with the absolute basic if you can afford it, I personally would consider it fairly high in priority bills but circumstances differ and as a result of the difficult times this country had you would be amazed how many people out there have no insurances, either life or buildings but this is not through choice but more a case of food on the table or insurance!

Avatar MIA

One other thing, insure for the rebuild cost, not the house value. Should be cheaper.

CeilingFly

If it was destroyed by floods, then you'll know the value of having insurance.

Try increasing the excess to €1000 and check the rebuild cost - far too many people have house value as rebuild cost and online calculators over price it too.

A 2,000 sq ft detached house in rural location would have a rebuild cost of about €200,000 - remember planning fees, services connections and many other costs don't come into rebuild costs.

Imo, under insurance is better than no insurance.

SteM

Tony EH wrote: »

Its "use" is not in question. Its cost is.

But you said you'd drop it completely. That's questioning its "use" imo.

phormium

Insuring for the rebuild cost rather than value should already be the case, surely nobody insures for market value as it can have no relation to rebuild costs, the original bank stipulated insurance value would have been rebuild cost.

I don't think banks can take out a house insurance on your behalf anymore and charge for it, I'm open to correction if anyone has had that done to them. To my knowledge that was back in the day when there was composite mortgage repayments with your house/life/repayment protection all lumped into the one repayment. They can no longer include any insurances in the mortgage repayment, they must be a totally separate payment so don't know how they would manage to charge you for it without you agreeing to it.

Jim2007

Tony EH wrote: »

Thing is, do mortgage lenders care whether you have house insurance or not?

Absolutely as it is their security against the loan. And if you check the conditions of your mortgage you will find that it is a requirement of the agreement.

Metric Tensor

Bear in mind that if you were to rebuild you would have to meet the current building regulations which puts the rebuild cost higher than one might imagine. Have a look at the rates people are getting per square foot in the construction & planning and prices forums.

beechwood55

If you drop your insurance then you will have no public liability insurance which protects you in the event of someone injuring themselves in your house. Something else to consider.