Mortgage and Buildings Insurance

Jon456

Hi,

When I first took out the mortgage for our house, one of the bits of paperwork said ;

"We do not require confirmation that you have adequate property insurance in place or need to hold a copy of the actual insurance documentation. However, it is important that you understand your responsibility to maintain adequate property insurance for the duration of your mortgage"

I have been renewing a buildings insurance policy every year since we brought the house - it has cost me about £450 so far and I have never claimed on it. What would happen if I didn't renew? As stated above, the mortgage company has never asked for proof of buildings insurance. Would/could they ever find out that I didn't have it and penalise me somehow? It does frustrate me that I have to pay for something that is in many ways like gambling, i.e in the grand scheme of things it's only the insurance companies that benefit from it.

sivs

If you had a fire and it burnt down you house, how would you pay for it to be rebuilt without insurance? You would still need to pay the mortgage on it.

If your insurance is high and you never claim why not increase the excess?

I don't think your mortgage company will find out unless something happens to your property.

Its all about RISK if you think you will be fine without insurance don't renew.

dunstonh

What would happen if I didn't renew?

You would be in breach of the mortgage conditions. You would probably get away with not paying the premium but should a claimable event occur which you could not cover out of personal savings, then you could end up bankrupt. They could also put you on the register for mortgage fraud for breach of terms resulting in a loss to the lender which will do wonders for your ability to get credit in future.

It does frustrate me that I have to pay for something that is in many ways like gambling,

Not paying it is gambling. Taking out buildings insurance is not gambling. not even close. It is mitigating risk.

You would have to be a complete donkey not to take out buildings insurance. It is so cheap yet covers what is likely to one one of your three highest value assets (property, income and pension).