Buying a home is a considerable investment, and choosing home insurance linked to the mortgage is an important and often necessary step. Banks often offer these policies with benefits such as a reduction in the interest rate. However, the question arises: Is it possible to change this insurance for another from a different company and how long is it mandatory to maintain it?
The 2019 mortgage law specifies that banks cannot force clients to take out specific insurance as a condition of granting a mortgage loan. Although they may suggest home insurance, the client has complete freedom to choose their insurer and policy.
Mandatory home insurance on mortgages
It is mandatory to maintain home insurance throughout the duration of the mortgage, insuring the home with minimum coverage. However, clients can change insurers at any time, and are not limited to staying with the same company for the entire mortgage term.
Process to change home insurance
To change the home insurance associated with a mortgage, it is essential to complete the procedures before the automatic renewal of the current insurance. It is recommended to start the process one or two months before the end of the insured period. It is vital to be informed about the expiration date of the current insurance and look for a new offer that meets the client’s needs.
Change mortgage life insurance
The procedure includes notifying the bank at least a month in advance about the desire to cancel the current insurance and then take out a new one. It is crucial to obtain a document from the new insurer that certifies the coverage of the mortgaged home, designating the bank as beneficiary so that the previous insurance can be canceled.
Although changing insurance can affect your monthly mortgage payment, opting for cheaper insurance with similar conditions can be beneficial. It is advisable to make detailed calculations to make an informed decision.
Risks of changing insurance without notice
Changing home insurance without informing can lead to automatic renewal of existing insurance and potential legal problems. Failure to communicate the change to the previous insurer or stopping payment on the policy without notice may result in cancellation of coverage and possible legal action by the company.
2024-01-29 13:05:52
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