Got a mortgage? Who chooses your home insurance?
A mortgage usually comes with home insurance attached. In the rush to sign, few people stop to ask what the bank actually requires and what is still their own decision.
1. The bank asks for the building. Your home secures the loan, so the bank usually requires the building to be insured and to be named as the payee of any claim. The exact cover required is set out in your loan agreement.
2. Insure the home, not the loan. What you still owe and what it would cost to rebuild are two different figures. If the building is insured for less than it is worth, many policies reduce the payout proportionally. Rebuilding cost is the right yardstick.
3. The rest is up to you. The cover the bank asks for protects its security. Your contents, water damage and liability towards your neighbours are your own choices. And once the loan is repaid, the home is still there, and so is the need to protect it.
Bank or insurance agent?
When you are signing for a loan, the easiest thing is to accept whatever the bank puts in front of you. It is worth knowing what changes when your home insurance is arranged through an insurance agent instead.
- A comparison, not a single option. A bank usually offers the policies of the insurer it works with. An agent who works with several insurers can show you alternatives, so you can compare cover, deductibles and exclusions. By law, the agent must tell you up front which insurers they work with (Article 29, Greek Law 4583/2018).
- The conversation starts with your home, not your loan. Anyone who sells you insurance, bank or agent, must first record your needs and offer a product that meets them (Article 30, Law 4583/2018). With an agent, the discussion starts from the property itself: rebuilding cost, contents, neighbours, the age of the building.
- Someone on your side when there is a claim. Reporting the damage, gathering the paperwork and following up on the payout are part of an agent’s job. You don’t handle it alone.
- The policy stays yours. If you move your mortgage to another bank or pay it off, the policy usually doesn’t need to change. Only the clause in the bank’s favour does.
Did you know… when a bank requires insurance linked to your mortgage, it must also accept a policy from another insurer of your choice, as long as it offers an equivalent level of cover? (Article 11(3), Greek Law 4438/2016)
Do you know how much your home is actually insured for?