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 Posted: Mon Sep 14, 2009 3:06 pm Post subject: Forced Insurance |
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Can anyone tell me if you dont have home owners insurance and the mortgage company carries insurance for you if this is unreasonably high?I think it is judging from the amount added to our payment.
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hummingbird
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| Posted: Mon Sep 14, 2009 4:22 pm Post subject: |
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| It's high priced and it's not homeowners insurance. It offers no coverage for you, it just protects the lender for the amount you owe them. Why on earth don't you have homeower insurance? |
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Fishman
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hummingbird
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| Posted: Mon Sep 14, 2009 7:04 pm Post subject: |
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| Oh, sorry to hear it. You're are in KY right? I've heard home insurance has gotten quite expensive there. Invest some time in shopping around with independent agents in your area and you should be able to find something that can fit your budget. Best of luck. |
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Fishman
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| Posted: Tue Sep 15, 2009 5:21 am Post subject: |
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This sounds like one of the very few times a Decreasing Term policy might be best.
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InsInvestigator
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| Posted: Tue Sep 15, 2009 6:25 am Post subject: |
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| Yes, and in most cases the policy will just cover the bank's interest. Example:You owe one payment on your house,you have a total loss, the insurance would pay the bank that one payment.Maybe it would be best to have your own policy and have it AND your prop. taxes come out of an escrow acct. |
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agent07
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| Posted: Tue Sep 15, 2009 9:50 am Post subject: |
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| Quote: | | Invest some time in shopping around with independent agents in your area and you should be able to find something that can fit your budget. |
Yes, that way it would be easier for you. But, at the same time go through the terms and conditions carefully before you sign for it. Sometimes the benefits are too hard to collect in the event of a crisis. So, you must get clarified with all that's mentioned in your papers.
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anonymous00
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| Posted: Wed Sep 16, 2009 5:48 pm Post subject: |
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All confusing to me.Are you saying that if they carry the insurance and the house burned and say we only had 2 payments left .The insurance company would pay the bank the 2 payments and we get nothing? We had Farm Bureau they say that is the cheapest insurance around these days.
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hummingbird
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| Posted: Wed Sep 16, 2009 7:10 pm Post subject: |
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Okay, now I'm confused. Let me ghet this straight; Are we talking about homeowner's insurance in the life insurance forum?
Please allow me to cut to the chase: If you have a mortgage and you die, someone [else] will be responsible for your mortgage payment - who will that be? The bank will usually cover themselves with a type of mortgage protection policy which leaves your loved ones absolutely nothing. These policies are usually not terribly expensive but somewhat one-sided. This is where a more traditional life insurance policy works best.
If the house burns down, hopefully the smoke detectors will work well and everyone will get out safely.
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| Posted: Tue Sep 22, 2009 3:20 pm Post subject: |
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We are talking about if I have a mortgage and no home owners insurance but the mortage holder takes out a policy and we have to pay it cause it is added onto our mortgage payment. If my hubby dies (God forbid) the insurance will only pay the house or property insured .But if the house if payed off then it will be free and clear .We aren't talking about if it burns I know the bank will get the money for that and we get nothing ...lol
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hummingbird
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hummingbird
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| Posted: Tue Oct 06, 2009 2:43 am Post subject: |
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WHAAAAAAAT?  
OK, I'm not confused about how to answer the question, I'm confused as to how this thread got so discombobulated.
HOMEOWNER'S insurance is hazard insurance on the home. This is the coverage for fire and all that other stuff like burglary, windstorm, liability and a boatload of other stuff. This is normally carried by the homeowner and is a requirement as long as a lien exists on the home (with certain rare exceptions). A mortgage company would only place this type of coverage on the home in the event that the lien is still in place.
If you're talking about paying off the mortgage in the event of your death, you're talking about "Credit life insurance." This simply pays off the balance of the mortgage in the event of the borrower's death, therefore giving the heirs free and clear ownership of the home. This coverage is almost ALWAYS voluntary except in rare situations.
If we're talking about protecting the lender's interest in the property in the event the borrower defaults on the loan, that's Private Mortgage Insurance, or PMI. That wouldn't be the case if the borrower owed little on the morgtage.
So, if the OP didn't have homeowner's insurance on the house and the lender found out (which they will), they have the right to place coverage on the home to protect their interests. Think about it...if there's no hazard coverage on the home and it burns down and there's still money owed on the house- what collateral is left to the lender?
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InsTeacher
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hummingbird
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| Posted: Thu May 20, 2010 2:41 am Post subject: |
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Hi hummingbird, glad you're still around! I can't believe this thread is still alive, and I still don't think anyone's actually answered your question. I would suggest that you read my last post referencing the homeowner's insurance as that's what you're referring to. I'm sorry that some of the other poster's got, shall we say, a bit distracted? 
If, as you said, your homeowner's policy (property policy) lapsed because you couldn't afford the premium, then the coverage placed by your mortgage lender was indeed what's called "Vendor's Single Interest" coverage. The "vendor" is the bank, and the "single interest" means that it only protects their (the bank's) interest in the home, which is the amount you still owe on the mortgage. This is the insurance that protects their interest in the event there's a loss to the home as you don't have any insurance that protects the bank 'cuz your insurance lapsed. The premium for this will be added to your mortgage balance and commonly adds to the monthly mortgage payment.
It's perfectly legal, you signed papers for this when you purchased your mortgage that would allow them to take this action, and the policy does nothing for you. Again, think "single interest." It's expensive, only protects the lender, and is almost certainly more expensive than just about anything you can purchase on your own... even if the house or you have insurability problems.
So, I hope that you've started shopping around for coverage. I looked at rates for homeowner's coverage in Kentucky, and the information I found should sound pretty good to you. Ky. ranks #43 in terms of HO premiums, with #1 being the most expensive. The average premium for the coverage is $578 annually and the rate quoted was for a HO3 policy. That's pretty much the standard, really good policy.
That rate ain't bad by any means. But, I must say... my state's better. I live in Oregon and we're #48 with an average annual premium of $496. Nyah Nyah.
The above statistical information is courtesy of the Insurance Information Institute: Check out their website at:
http://www.iii.org/index.html
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InsTeacher
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| Posted: Thu May 20, 2010 6:33 am Post subject: |
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Hummingbird . . .
Apparently you did not have an impound account to collect and hold additional money with each payment to cover property taxes and insurance.
In the future, you need to set up an account to fund in order to prevent this from happening again. It could be a simple savings account at a bank or credit union or a money market account with the bank or a mutual fund company.
Figure your current expenses for tax and insurance and divide by 10, then add that amount to savings each month. You should have more than enough to cover the expenses, once you've contributed 5-6 months worth of payments into the account. But you'll need to periodically refigure how much 1/10 of the actual expenditures is.
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