Insurance of collateral for a mortgage. Home insurance for a mortgage: cost, is it necessary, documents

Banks, when providing a loan to purchase real estate, not only issue a mortgage on it, but also require mortgage insurance. Purchasing a property insurance policy is a requirement of any mortgage agreement. What about other types of insurance?

Understanding What Mortgage Insurance Is

Mortgage insurance is a set of types of insurance that are designed to protect the financial interests of each participant in residential mortgage lending.

The need to conclude such agreements is due to the need:

• bank - in obtaining loan repayment guarantees, which allows reducing interest rate and increase the loan term relative to consumer loans;
• the client - in obtaining financial security for the ability to fulfill their obligations in the event of death, disability, decrease in income, and other things.

The main purpose of mortgage insurance is to redistribute risks between insurers, borrowers and lenders in order to increase the reliability of the mortgage insurance system.

Types of mortgage insurance:

• insurance of property under a mortgage, which according to the agreement was pledged, against the risks of loss or damage;
• personal, which is life and disability insurance of the client (borrower or co-borrower);
• title is insurance against loss of title to collateral as a result of termination of ownership.

As an additional option, insurers offer to insure the civil liability of the premises owner against:

• by third parties during the operation of the property (for example, from cases of flooding of a neighbor’s apartment);
• by the creditor for failure to fulfill accepted financial obligations (if there is a delay, if it is impossible to make payments in the future).

Features of this type of insurance

Mortgage risk insurance differs in that the beneficiary under the contract is the lender (bank). In the event of an insured event, the insurer will make an insurance payment in his favor. Its size cannot exceed both the amount of the outstanding debt and the amount of damage incurred.

There is a scheme for paying the insured amount in a lump sum - immediately - upon concluding an agreement for the entire loan term. A more common scheme is the annual payment of the insurance amount.

Do I need to insure my apartment every year if I have a mortgage? Yes. This is specified in the loan agreement.

Legality of requirements for concluding insurance contracts

Real estate insurance for a mortgage: mandatory or not – debates have been going on for a long time, but there is a law and there is judicial practice.

According to Federal Law No. 102-FZ “On Mortgages,” mortgage borrowers are required to insure the collateral. The document does not say anything about other types of insurance.

Personal insurance for mortgage Art. 935 of the Civil Code of the Russian Federation is defined as voluntary. However, banks strongly recommend that their clients take out such insurance. It is optional, but its absence will result in an increase in the loan rate by at least 1%.

A similar situation has developed with regard to title insurance. The client has the right to refuse, but the loan, since it is more risky from the lender’s point of view, will be offered to him on other, less favorable terms than to those borrowers who agreed to fulfill the bank’s requirements.

Judicial practice in relation to such disputes indicates that in most cases the requirement to conclude a life and health insurance contract is recognized as an abuse of freedom of contract, since they refused to issue a loan without obtaining insurance.

According to the Directives of the Central Bank of the Russian Federation dated November 20, 2015 No. 3854-U, the borrower has the right to refuse the insurance product imposed on him within 5 days from the moment of signing the relevant documents. The amount paid by him must be returned in full.

However, the Central Bank of the Russian Federation explained that if the borrower refuses this service, the lender has the right to change the terms of the standard agreement and increase the interest rate.

This clause is already included in most mortgage agreements. Lenders also widely use their right to terminate the mortgage agreement unilaterally due to the client’s failure to comply with its terms. This provision is also stated in the loan documentation. The bank sends a notice to the client requiring him to either take out insurance, or he will terminate the contract. The latter means that the borrower is obliged to repay the entire loan amount or face legal proceedings.

Citizens' appeals (usually during legal proceedings) to the fact that the requirement for insurance violates their rights are not accepted: the agreement was concluded under certain circumstances, about which the client was warned in advance.

Signing the documents means agreement with the fulfillment of the requirements established by them.

Typical insurance cases

Insurance of a real estate property typically assumes as an insured event:

• fire, including one that occurred outside the insured property;
• household gas explosion;
• natural disaster;
• flooding that occurred as a result of an accident in the water supply, sewerage or heating system, even if the water came from neighboring premises;
• illegal actions of third parties (hooliganism, robbery, vandalism);
• falling of aircraft (parts thereof) onto real estate;
• identification of structural defects in the structure, which were unknown to the policyholder at the time of concluding the contract.

You need to be prepared for the fact that the minimum package offered by insurers provides for payments only when the insured property has suffered significant damage.

For example, if your neighbors' wallpaper was damaged as a result of a flood, there will be no payment, but if someone breaks a window, you can count on compensation for its cost. The entire loan balance will be paid only when the object is completely destroyed. In the case of a private house, if the foundation remains, then only part of the debt will be repaid, because, from the insurer’s point of view, the rest of the building can still be used to build new housing.

To get more guarantees and more compensation, you should take out more extended insurance, but it will cost more.

The next type of mortgage insurance is life and health insurance of the borrower. Insured events under such a contract are:

• death of the insured due to an accident or illness that occurred during the period of validity of the contract;
• loss of ability to work as a result of illness or accident with the assignment of 1 or 2 disability groups.

What is title insurance for a mortgage is easier to understand from the list of insured events under the following contracts:

• recognition of the sale and purchase as invalid (based on clause 2 of Chapter 9 of the Civil Code of the Russian Federation);
• demand from the buyer of housing (in whole or in part) by persons who retain ownership of the property.

This type of insurance is designed to protect the rights of a bona fide purchaser. Confirmation of the occurrence of an insured event will be judgment. Payments under such agreements should compensate the borrower’s financial costs and guarantee the lender’s repayment of the loan.

In such matters insurance company has the right to provide full legal support, including representation of the client’s interests in court.

The problem of receiving insurance payments

The insurer has the right to refuse to pay insurance compensation in a number of cases. All of them are specified in the insurance contract.

Personal insurance for mortgage lending assumes, as an insured event, the identification of the borrower with the 2nd or 1st disability group or his death. In this case, the payment is made in full as a one-time payment. In the first case, the property remains the property of the borrower, in the second it will be included in the inheritance estate and the heirs will receive it without any encumbrance (without collateral or the obligation to repay the loan debt). But for example, compensation under a life insurance contract will be denied if death occurred as a result of suicide or a car accident in which the policyholder was at fault. They will not pay compensation in cases where the client initially knew about health problems, confirmation of which the insurer will find in his medical records, but did not inform about this when concluding the contract.

There will also be problems with compensation for those affected by professional risks, as well as those in whose blood at the time of the insured event alcohol or drugs are found, the use of which was not prescribed by a doctor. According to the law, the insurer in such a situation is not obliged to repay the debt.

If life and health insurance was taken out in relation to both spouses-co-borrowers, then in the event of the death of one of them, the debt to the bank will be repaid only by half, i.e. by 50% of the loan balance. If the insurance was made taking into account certain proportions, then the payment will be made taking into account how it was stated in the contract. For example, in the event of the death of one of the spouses, compensation may be 70% of the balance, while in the event of the death of the other - 30%.

In cases where there is no firm certainty that the insurance company’s refusal is correct, it is worth contacting a lawyer specializing in this area.

Already at the first consultation, having studied all the documentation, the specialist will be able to confirm or refute the legality of the insurer’s actions and suggest the advisability of protecting their interests in court.

How to save on mortgage insurance

The insurance program offered by the lender's employees is, as a rule, a product that is unprofitable for borrowers. Most banks act as intermediaries between the true policyholder, the organization with which the contract is actually concluded and which will subsequently make insurance payments if necessary, and the client. Accordingly, the lender most likely receives a discount from the “supplier” and at the same time makes an allowance to cover its own costs.

As a result, an insurance contract concluded in a bank office may turn out to be 10-20% more expensive than an agreement drawn up on the same terms either with the insurer itself or with its other official partner.

If you decide to purchase insurance directly from the insurer, check with the lender for a list of accredited companies. Despite the fact that any restrictions when choosing an insurance company are unacceptable by law, they can be established in spite of them. Therefore, it is still wiser to check with the bank for a list of accredited insurers.

Considering that the insured amount is calculated based on the loan balance plus interest that will be accrued over the next year, savings are possible due to early repayment of the loan.

The faster the mortgage debt is repaid, the less interest the borrower will pay, the less the insurance amount will be.

You should also consider the loan repayment date. Ideally, you need to determine the deadline for full repayment of the loan by the time the next insurance contract expires. If this does not work out, then you can, by obtaining a corresponding certificate from the creditor about the absence of debt, contact the insurer with a request to return part of the insured amount according to the actual time of existence of the loan obligation (debt to the bank).

How to properly insure yourself with a mortgage so as not to overpay. When determining the sum insured, insurers take into account:

• client's age. The policy will be cheaper for people who are 25-35 years old;
• the price of the property - the more expensive it is, the more the insurer needs to pay;
• with personal insurance, they may be asked to undergo a medical examination, based on the results of which the cost of the policy will be determined. The fewer health problems a person has, the fewer bad habits he has, the greater the discount he will be given;
• the larger the loan amount, the greater insurance amount will be assigned for payment.

Resume

Mortgage insurance: required or not? An insurance contract for collateral property is required. The rest - formally no; in fact, the bank indirectly (through deterioration of lending conditions or even refusal to conclude a mortgage agreement) forces clients to agree to this requirement.

From a financial point of view, sometimes it is a little more profitable to agree to an increase in the loan rate, but refuse additional insurance.

Interest is accrued regularly on the debt balance, which decreases as payments are received to repay the loan, i.e. monthly or even more often. When determining the insured amount, the amount fixed at the beginning of the year is taken into account.

Smart decision this issue– comply with the lender’s request, but enter into a mortgage insurance contract directly with the insurance company.

The benefit of the borrower with mortgage insurance is that if an insured event occurs, although the bank will receive the payment, the citizen will be released (partially or completely) from the obligation to pay the mortgage.

In difficult times, which are designated in insurance as insured events (loss of property, disability, etc.), this can come in very handy.

Taking into account the above, we can say that a mortgage is a risky project for the borrower and the insurer. The bank, if it has a full package of insurance and collateral, risks less.

What is real estate insurance when taking out a mortgage? Where can I get mortgage insurance cheapest? How much does it cost to insure an apartment with a mortgage?

Hello, dear readers! Welcome to the online magazine “HeatherBober” and I, insurance expert, Denis Kuderin.

In a new article I will talk about mortgage insurance. The material will be useful to everyone who purchases housing with a mortgage, as well as to those who are interested in current financial issues.

And now - in detail and in detail on each point.

1. What is mortgage insurance and when is it needed?

Buying real estate with a mortgage is a risky and lengthy undertaking. Loan amounts are repaid over the years - no one can predict in advance how the situation with debt repayment will change in six months, a year, five years.

For this reason, both parties to the mortgage agreement try to protect themselves from possible losses. To reduce the risks of borrowers and lending companies, the state has introduced a mandatory condition when applying for a mortgage - insurance.

Some believe that mortgage insurance takes into account only the interests of lenders: banks want to protect themselves from the borrower losing their solvent status.

However, such insurance also brings certain benefits to loan recipients. After all, no one can guarantee home buyers the availability of a permanent income, especially in conditions of permanent economic instability.

Every borrower can lose their job, get sick, or get into an accident. And the apartment itself may suffer from fire, flooding and other unforeseen factors.

In addition, full mortgage insurance will help you get a loan on more favorable terms: banks are much more loyal to clients who choose the full range of insurance services.

So, mortgage insurance– This is insurance against the risks of lenders and borrowers. In modern Russian lending, this is a mandatory procedure when purchasing a home with a mortgage.

No financial institution will issue you a loan without taking out a policy. At the same time, real estate (collateral) insurance acts as a guarantee of security for the lender, and health, life and solvency insurance of the borrower protects the interests of the client.

Thus, both parties are interested in the transaction. Another thing is that bank employees know much more about insurance than the average citizen and often insist on contract terms that are most favorable and beneficial specifically for the financial organization.

That is why it is useful for loan recipients to study the issue of mortgage insurance in advance - this will reduce unnecessary expenses and help protect their property interests.

By law, the borrower is required to insure only the collateral. All other types of insurance are optional.

But this is in theory, but in practice banks usually require borrowers to insure along the way:

• life;
• ability to work;
• title(ownership of real estate).

Whether to agree to the creditors’ conditions or not is a personal matter for everyone. For obstinate clients, the bank can easily increase the mortgage interest rate.

The policy term is equal to the expected payment period. The insured amount is equal to the size of the loan or the market value of the home. Payments are due once a year. When the time for payment approaches, the bank informs the company of the current amount of debt, and the insurer calculates the amount of the premium.

2. Classification of mortgage insurance - TOP 3 main types

Since the object of the mortgage agreement is real estate, it plays the main role in insurance procedures. Other types of mortgage insurance are only auxiliary products aimed at reducing additional risks for lenders and borrowers.

However, it is worth researching all types of mortgage insurance.

Type 1. Home insurance

Mandatory type of insurance when applying for a mortgage. The property is insured against damage and complete destruction. If an insured event occurs, the mortgage is paid off by compensation for damage from the insurer.

Insured events include:

• fires;
• natural disasters;
• domestic gas explosions;
• accidents of sewer and water supply systems;
• illegal and hooligan actions of third parties;
• vandalism.

The policyholder is obliged to immediately notify the insurer of the occurrence of such cases and file an application with the company. Each incident requires expert verification and confirmation.

Example

There was a fire in the apartment that damaged structural elements dwellings. Losses are compensated not by the owner of the apartment, and not by the bank with which the housing is pledged, but by the insurer. True, evidence must be presented that the fire was not the result of deliberate actions of the borrower or other interested parties.

Not all cases of damage and destruction of real estate fall into the insurance category. For example, if the apartment was damaged as a result of military operations, nuclear explosion, mass strikes and pogroms, the insurer has the right not to pay losses.

View 2.

If the policyholder is unable to pay the mortgage loan due to serious illness, disability, serious injury or loss of ability to work, the insurance company undertakes to compensate the bank for the damage.

In the event of the death of the borrower, the insurer releases relatives and friends from loan payments and assumes debt obligations. The insurance does not apply if death or disability is the result of intentional self-harm or suicide. Injuries sustained while intoxicated or under the influence of drugs do not count.

This type of insurance is optional and you can refuse it if you wish. However, banks often do not leave borrowers a choice: either they insure life, or the loan rate will be 1-3% higher.

View 3. Title insurance

Title insurance protects the interests of banks that may be affected if the borrower loses title. Such insurance is not issued in all situations, but only in cases where the lender identifies additional risks when studying documents for housing.

Example

A year after purchasing a home on the secondary market, it turns out that the seller’s son, who was absent from the city at the time of the transaction, has the right to own it. Litigation on this issue may drag on for many years, but any losses of the bank will be covered in a timely manner by the insurer.

The title insurance contract is concluded either for 3 years or for the entire loan term.

More information on housing protection issues can be found in the articles “” and “”.

3. How to insure your mortgage - 5 simple steps

Every self-respecting bank has a pre-compiled list of insurance partners to which managers refer borrowers.

Citizens should remember that choosing an insurer is their personal and voluntary matter. Any loan recipient has the right to refuse insurers recommended by bank employees and choose a company at their own discretion.

Why is this important? It's simple - tariffs differ from one insurance company to another, sometimes significantly. Meanwhile, even tenths of a percent in relation to mortgage amounts over the years turn into tens of thousands of overpaid rubles.

So - be careful.

Step 1. Finding a suitable insurance company

When choosing an insurer, act with extreme caution. Study the situation on the insurance market in advance. Reliability, solvency and the terms of insurance themselves are important.

Other important parameters:

• experience as an insurer;
• pricing policy;
• rating according to independent organizations;
• availability of preferential offers and promotions.

Any way to reduce the interest rate on contributions is worth using. It is advisable to act through an insurance broker - a professional who will select the most profitable options for you.

Additional information is in the article "".

Step 2. Selecting the type of insurance

Just a couple of years ago, when issuing loans, banks required compulsory insurance not only the property, but the client’s life and ability to work.

However, Rospotrebnadzor saw this practice as a violation of consumer rights and demanded changes to the Mortgage Law. Now the only mandatory item for the borrower is insurance of the collateral (that is, the apartment itself).

All other types of insurance are a matter of personal choice of the client. In practice, borrowers are not always able to achieve compliance with their rights. So, if you refuse life insurance, be prepared for pressure from bank employees.

At a minimum, the manager will give you a lecture on the importance of comprehensive insurance; in the worst case scenario, your mortgage rate will be increased. Banks cannot directly refuse to issue a loan due to refusal to insure their ability to work and life. But it is in the client’s interests to give in to employee requests if there is a direct danger of an increase in the commission.

Step 3. Determining possible risks

Disability and health insurance is especially important for people who, at the time of taking out a mortgage, already have serious chronic illnesses that are fraught with dangerous complications.

In such cases, the risk of non-payment of the loan actually increases, and purchasing comprehensive insurance is a truly advisable and necessary step.

Economic risks should also be taken into account: for example, if you are not confident in your employer, it is better to protect yourself from losing your position and main source of income.

Step 4. Collecting documents

Mortgage insurance is issued quite quickly.

Standard list of documents:

• borrower's passport;
• bought/sold agreement;
• certificate of ownership of the apartment;
• medical certificates about health status (if necessary);
• application (questionnaire).

Sometimes the insurer requests additional papers - certificates from the BTI, extracts from the house register, a real estate appraisal report.

Step 5. We sign the agreement

When signing an agreement, first study all its clauses. Even the small print and notes deserve attention.

Remember that a mortgage takes years or even decades to pay off; every omission in the insurance contract is potentially damaging to your pocket. Unaccounted tenths of interest on the contribution eventually translate into thousands of rubles.

So I repeat - be careful! Banks and insurers act in their own interests, your task is to protect your own finances and property.

4. What determines the cost of mortgage insurance - 4 main factors

The cost of a comprehensive insurance package is calculated as a percentage of the loan amount. In different companies this figure varies from 0.5 to 1.5% per year. It will be even more expensive if you insure each risk separately.

Tariffs are calculated individually for each client. The amount of insurance is influenced by many factors – let’s look at the most important of them.

Factor 1. Gender and age

For young people, the cost of insurance is minimal. Men always pay slightly more for insurance than women. This is standard practice when taking out any policies. Tariffs are also affected by the profession of the policyholder. The more dangerous it is, the higher the coefficient.

Factor 2. Health status of the policyholder

For life insurance, you will need a medical certificate of health. If the company becomes aware that the client has concealed information about the presence of a serious illness, payments may be denied in the event of an insured situation.

The questionnaire contains items regarding bad habits and lifestyle. It is better to answer such questions as objectively as possible - there will be fewer problems with representatives of insurance companies in the future.

Even height and weight indicators are taken into account. If the ratio is higher or lower than normal, tariffs also increase.

Factor 3. Housing type

When insuring real estate, the type of housing matters. The condition and material of the floors, the status of the apartment, the number of rooms, the geographical location of the apartment, the presence of a gas stove and other objective indicators are taken into account.

Factor 4. Loan size

The larger the loan amount, the higher the interest rate on the insurance premium. As the loan is repaid, this figure decreases because the total amount owed decreases.

The table will give a more clear idea of ​​the formation of prices for insurance services:

5. Offers for mortgage insurance on the best terms - review of the TOP 5 companies providing services

Dozens of large and small companies provide mortgage insurance. Your financial security directly depends on the right choice of insurance partner.

We offer an overview of the five most reliable Russian insurers.

A universal insurance company with many years of experience. The company was founded in 1947. It is constantly included in the TOP 10 best insurers in the Russian Federation. It occupies the highest positions in official and “popular” ratings. It has subsidiaries in Armenia, Uzbekistan, Ukraine and other countries. A mortgage insurance policy can be issued and paid for online. All types of mortgage insurance are available plus insurance for real estate purchased through military mortgage.

Experience since 1921 (the company is the legal successor of the state structure Gosstrakh). Affordable insurance products for all occasions. The highest rating from independent rating agencies. Protection of real estate and the health of mortgage borrowers, fast issuance of a policy, consultations with specialists by telephone and online. The company has offices in almost every major locality Russia.

3) "RESO-Garantiya"

An experienced company operating since 1991. Offers more than a hundred insurance programs for individuals and legal entities. Repeated winner of the most prestigious insurance award in Russia “Golden Salamander”.

Performs quick registration of policies and provides consulting support. It has an extensive network of branches and provides the opportunity to issue a policy online. Offers all types of mortgage insurance. IN at the moment The “Profitable Mortgage” promotion is in effect.

4) "AlfaStrakhovanie"

A company with the highest rating “A++” from the Expert agency and branches throughout Russia. A huge selection of affordable and effective insurance products, efficiency, customer consultations by phone and online. Quick policy registration in the company's offices or via the Internet. The company offers citizens who already have mortgage insurance to change their insurer and get a policy on more favorable terms.

5) "VTB Insurance"

A successful participant in the insurance market, operating since 2000. Operational insurance of property, life, health, civil liability on favorable terms. Large annual volume of payments and insurance fees. Leader in mortgage insurance. Reliable protection of mortgage loans and collateral real estate. Benefit and confidence in the future for the bank and the borrower.

We recommend that you contact us at all stages of insuring your deposits and when working with companies that provide deposit insurance services. This will reduce the risk of making mistakes in this important issue.

6. How to save on mortgage insurance - 3 simple tips

A mortgage insurance policy will cost less if you use our helpful tips.

Tip 1. Avoid unnecessary insurance services

As mentioned above, when insuring a loan, it is mandatory to protect the collateral itself - that is, an apartment, house or other real estate.

Mortgage insurance refers to this type of insurance, the purpose of which is to reduce the risks of the parties when concluding a mortgage insurance agreement. The need for such an event is explained by the characteristic features of a mortgage, primarily the long term and large amount of lending. That is why, as one of the conditions for issuing a bank loan, the bank puts forward a requirement to obtain an insurance policy.

More about insurance

The main goal of mortgage insurance is to reduce the risk of a loan transaction for both the banking organization and the borrower. Considering the fact that the main risk when signing an agreement is borne by the lender who allocates financial resources, he is in most cases the initiator of mortgage insurance. However, one should not assume that issuing a policy is beneficial only for the bank.

Mortgage insurance also benefits the borrower. But for this, obtaining insurance must occur on favorable terms and on a competitive basis. In this case, the insurance policy becomes a mutually beneficial instrument, making the loan transaction less risky and more reliable for both parties.

What is insured?

The legislation in force in Russia today provides for compulsory insurance of real estate purchased with a mortgage. However, in addition to this, banks almost always offer additional insurance for the borrower’s life and health, disability, as well as so-called title insurance.

Each of the listed types of insurance should be considered in more detail.

Property

Insurance of property purchased with a mortgage is mandatory. Insurance cases include:

• fires and other natural disasters;
• household gas explosions and other accidents on the facility’s utility lines, including flooding;
• actions of third parties related to violation of Russian legislation, including hooliganism and vandalism.

A specific list of risks is determined taking into account the wishes of the lender and borrower and can be finalized based on the characteristics of the object and its functional purpose. The rate is set by the insurance company and also takes into account the characteristics of the property, including market value, technical condition and sizes.

The basis for calculating the insured amount is an expert assessment of the value of housing or other type of real estate, which was made during the process of obtaining a mortgage.

Life and health

Personal insurance of the borrower when taking out a mortgage loan does not act as mandatory requirement legislation. However, banks are interested in this type of insurance, so if they have a policy, they simply agree to provide a preferential interest rate on the loan. As a rule, the rate reduction is 0.5-1%. As a result, given the long term of the loan and the rather large amount of the amount, such savings turn out to be very significant for the borrower, despite the additional costs of issuing a policy.

Insured events when concluding a personal insurance contract usually include:

• loss of ability to work for a certain period of time associated with illness;
• permanent disability due to disability or serious illness;
• depriving the borrower of a source of income;
• death of a bank client, etc.

As with regular personal insurance when calculating the tariff taken into account large number factors. The most important consideration is the borrower’s age, marital status, income level, health status, etc.

Loss of title

This type of insurance is quite specific, so it is used in practice much less frequently than the options described above. Its essence is to pay insurance compensation in the event that a bank client loses the right of ownership of property purchased with a mortgage by a court decision.

The initiator of issuing such a policy is always a credit institution, and the reason is usually the complex legal status of a particular property. An example of such situations is an apartment that is purchased by proxy of the owner, has changed several owners within a short period of time, or the current owner is a minor.

In each of the listed cases, there is a high probability that the transaction concluded as a result of mortgage lending will be challenged in court.

Title insurance allows parties to obtain protection from such developments.

What's the benefit?

All of the above types of mortgage insurance provide quite serious benefits to both parties to the loan transaction. However, the level of profitability of this event for the bank and the borrower varies greatly.

For the bank

A credit institution almost completely insures all potential risks when making a financial transaction with a borrower. Even taking out a compulsory real estate insurance policy significantly reduces the risk of issuing a loan for the bank. By obtaining the other two types of insurance, the financial institution reduces the risk of the mortgage to zero. An important bonus in such a situation is that all insurance costs are borne by the borrower.

An important feature of mortgage insurance is the conclusion of an agreement with an insurer accredited by the bank issuing the loan. Often in such a situation, the insurance company is a subsidiary or dependent structure in relation to the financial organization.

Naturally, there are no problems in obtaining any insurance compensation in this case.

For the borrower

The situation from the debtor's side looks somewhat different. Firstly, unlike a bank, it does not have qualified lawyers capable of defending the interests of clients before the insurance company. Secondly, the insurer is in no way dependent on the borrower. As a result, obtaining insurance compensation often becomes a very problematic and unpromising event.

Of course, registration of compulsory real estate insurance is a significant plus. However, if the property is destroyed by fire or as a result of another natural disaster The insurance compensation is received by the bank. The borrower, as a rule, does not have the opportunity to compensate even for payments already made.

Personal mortgage insurance also provides some benefit by protecting the borrower in the event of disability. But even in this case, he cannot claim any payments, since the funds in most cases also go to the bank. The main advantage for the client is a reduction in the interest rate on the mortgage, as well as the closure of debts to the credit institution.

The benefits of title insurance for the borrower are also very relative. The fact is that the payments made by him most likely will not be compensated, although the insurance company usually covers the debt to the bank. It is much easier to avoid such problems by carefully and competently selecting a property purchased with a mortgage than by subsequent title insurance.

Obligation to issue a policy

As already noted, when applying for a mortgage, it is mandatory to obtain insurance for the mortgaged property. Any other types of insurance are possible only if the borrower voluntarily agrees to them. The imposition of any related insurance services is considered a violation of the law.

When contacting regulatory authorities, for banks this is the Central Bank of the Russian Federation, as well as Rospotrebnadzor, very serious penalties may be applied to credit institutions.

What does the law say?

The legal requirements regarding mortgage insurance are set out in No. 102-FZ, which was signed on July 16, 1998. Since acceptance Federal law has been changed several times, and recent adjustments have been made No. 486-FZ, which dates back to December 31, 2017. The provisions of the said normative act clearly stipulate the mandatory nature of insurance for the mortgaged real estate. All other types of insurance are carried out exclusively on a voluntary basis.

Existing arbitration practice also shows that if any issues related to this topic arise, the courts make decisions in favor of the borrowers.

Cost of mortgage insurance

When determining the cost of mortgage insurance, several factors are taken into account, a specific list of which is determined individually by each insurance company and depends on the type of policy issued. When concluding a contract for comprehensive insurance, including all three types of risks described above, the amount of the insurance premium is affected by:

• the estimated value and technical condition of the property registered as mortgage collateral;
• the age of the borrower and his state of health;
• the number of transactions with this object completed in the last few years;
• the identity of the seller of an apartment or other type of real estate, etc.

How to calculate?

An approximate calculation of the cost of a mortgage insurance policy is quite simple to calculate using one of the many online calculators posted online on thematic resources. It is even more correct to use the services of specific insurance companies posted on their official websites. In this case, the price calculation will be more accurate, since the calculations use the current tariffs of a particular insurer.

The final calculation of the insurance price can only be obtained during the process of concluding a mortgage agreement. This is because some of the nuances of insurance will become clear only at this stage of negotiations. In most cases, in practice, a draft mortgage contract is first prepared, then insurance is taken out, and only after that the loan agreement is signed.

Where do you get mortgage insurance?

Today, mortgage lending is one of the popular banking services. A logical consequence of this is the demand for mortgage insurance, which is offered by almost all serious participants in this market segment.

It is advisable to consider the offers of the most well-known insurance companies.

Sberbank insurance

All clients of the undoubted leader in the country's financial sector, Sberbank of Russia, are offered to take out insurance from the subsidiary company. Moreover, such an offer is posted directly on the official website of the credit institution at sberbank.ru. Naturally, the insurance company’s Internet resource also offers the opportunity to submit an online application for a policy, which can be easily implemented on sberbankins.ru.

The main advantages of contacting Sberbank insurance are:

• submission of insurance documents to Sberbank, which is carried out by the insurance company;
• stable financial position of the insurer, which is guaranteed directly by its owner in the person of Sberbank of Russia;
• reasonable cost of insurance rates, which are: for real estate - from 0.12% to 0.25%, for personal insurance - from 0.3% to 1.5%, for title - 0.3-0.5%.

VTB Insurance

The name of the insurance company clearly demonstrates what large Russian financial holding it is part of. VTB Insurance's mortgage offer is one of the most profitable on the market. Its main advantages are:

1. comprehensive nature, providing for the possibility of discounts when taking out a policy for all three types of risks at once;
2. low tariffs. As a result, the minimum insurance package under a special offer will cost the borrower only 3 thousand rubles per year;
3. stable financial position, which is ensured by the participation of the insurance company in the VTB group.

You can apply for an insurance policy on the official website of VTB Insurance at vtbins.ru. As an additional bonus, there is a convenient and well-thought-out interface of the site and the online services posted on it.

VSK

VSK Insurance House is one of the top 5 largest domestic insurers. At the same time, issuing mortgage insurance is deservedly considered one of the most popular services of the company. VSK offers all three types of such insurance. Detailed information on the terms of the agreement is posted on the company’s official website at vsk.ru. An important advantage of VSK’s commercial offer is the fact that the insurer is accredited to issue insurance in almost all major banks in Russia, including Sberbank, VTB and other large market participants.

RESO-Garantiya

The company has developed a special commercial offer called “RESO-Mortgage”, which is posted on the official website at reso.ru and is deservedly popular among borrowers. There are several reasons for this:

• reputation of the insurer, which ranks 2nd in terms of the volume of insurance premiums collected from clients in 2017;
• the reluctance of some borrowers to take out insurance in companies directly related to the bank where the loan is received. In this case, RESO-Garantiya, like VSK, are the most common alternative options;
• reasonable level of established insurance rates;
• a convenient online calculator for calculating the cost of insurance, which is located at http://www.reso.ru/Retail/Ipoteka/Calculator/.

Alliance (ROSNO)

Allianz insurance company is a prominent participant in the global insurance market, confidently entering the top 50 in Russia largest companies on this segment. It provides all three types of mortgage insurance, focusing its work on an impeccable business reputation. In the conditions of the domestic insurance market this fact acts as a serious competitive advantage. You can apply for insurance directly on the company’s website at allianz.ru.

Rosgosstrakh

The terms of the mortgage insurance program in Rosgosstrakh are posted on the official website of the company, which is in the top 10 on Russian market, at rgs.ru. Among the services provided are insurance of real estate pledged with a mortgage, as well as registration of title and personal insurance policies.

Among competitive advantages company: a flexible system of tariffs, provision of installments, as well as the possibility of returning part of the insured amount if the loan is repaid early.

Ingosstrakh

The company ranks 6th in the ranking of the largest insurers in Russia in terms of the volume of insurance premiums collected in 2017. The main advantages of mortgage insurance at Ingosstrakh are the ability to issue a policy under conditions that provide for an annual payment of 150 rubles per year. More details about the company’s commercial offer can be found on its official website at ingos.ru.

AlfaInsurance

AlfaStrakhovanie is one of the largest private insurance companies in Russia and is part of the Alfa Group financial consortium. This provides the insurer with a solid financial base, and in addition, allows it to work exclusively with Alfa-Bank clients. Among the advantages of cooperation with the company is 20 years of experience successful work, a well-developed online service provided on the official website of AlfaStrakhovanie at alfastrah.ru, as well as the highest reliability rating of category A++ assigned to the insurer.

SOGAZ

Mortgage insurance can hardly be called core for SOGAZ, however, the company is actively developing this area of ​​work. The conditions for issuing a policy are presented on sogaz.ru, and the main advantages of contacting SOGAZ include:

• accreditation in almost all major Russian banks;
• the ability to use a flexible system for calculating insurance rates;
• providing additional discounts when purchasing comprehensive insurance.

How to get mortgage insurance?

Possible options for obtaining mortgage insurance can be found directly at the bank where the loan is obtained. However, it is necessary to find out full list insurance companies accredited by this financial organization.

Where to contact?

The next step is to carefully study the proposals of each of the insurers accredited by the bank. At the same time, the credit institution does not have the right to impose a specific company for insurance. The borrower has the right to enter into an agreement with the accredited company that offers the most favorable conditions.

What will you need?

The list of documents required to obtain a policy is determined by each insurer independently. It depends on the type of insurance, as well as the individual characteristics of the property and the borrower.

Procedure

In most cases, the insurance contract is signed simultaneously with the signing of the mortgage. Moreover, the insurer often sends a representative to the bank’s office for this purpose.

Actions upon the occurrence of an insured event

The contract concluded with the insurance company contains a list of actions that the borrower must take in the event of an insured event. In most situations you need to do the following:

1. notify the insurer;
2. try to minimize the damage caused to the insured object;
3. wait for representatives of the insurance company and provide them with access to the property;
4. promptly draw up the documents specified in the contract as confirming the occurrence of an insured event.

In this case, in no case should you try to independently negotiate with those responsible for the occurrence of the insured event. This should be done by the insurer's specialists.

Banks, when providing a loan to purchase real estate, not only issue a mortgage on it, but also require mortgage insurance. Purchasing a property insurance policy is a requirement of any mortgage agreement. What about other types of insurance?

Understanding What Mortgage Insurance Is

Mortgage insurance is a set of types of insurance that are designed to protect the financial interests of each participant in residential mortgage lending.

The need to conclude such agreements is due to the need:

• bank - in obtaining loan repayment guarantees, which allows reducing the interest rate and increasing the loan term relative to consumer loans;
• the client - in obtaining financial security for the ability to fulfill their obligations in the event of death, disability, decrease in income, and other things.

The main purpose of mortgage insurance is to redistribute risks between insurers, borrowers and lenders in order to increase the reliability of the mortgage insurance system.

Types of mortgage insurance:

• insurance of property under a mortgage, which according to the agreement was pledged, against the risks of loss or damage;
• personal, which is life and disability insurance of the client (borrower or co-borrower);
• title is insurance against loss of title to collateral as a result of termination of ownership.

As an additional option, insurers offer to insure the civil liability of the premises owner against:

• by third parties during the operation of the property (for example, from cases of flooding of a neighbor’s apartment);
• by the creditor for failure to fulfill accepted financial obligations (if there is a delay, if it is impossible to make payments in the future).

Features of this type of insurance

Mortgage risk insurance differs in that the beneficiary under the contract is the lender (bank). In the event of an insured event, the insurer will make an insurance payment in his favor. Its size cannot exceed both the amount of the outstanding debt and the amount of damage incurred.

There is a scheme for paying the insured amount in a lump sum - immediately - upon concluding an agreement for the entire loan term. A more common scheme is the annual payment of the insurance amount.

Do I need to insure my apartment every year if I have a mortgage? Yes. This is specified in the loan agreement.

Legality of requirements for concluding insurance contracts

Real estate insurance for a mortgage: mandatory or not – debates have been going on for a long time, but there is a law and there is judicial practice.

According to Federal Law No. 102-FZ “On Mortgages,” mortgage borrowers are required to insure the collateral. The document does not say anything about other types of insurance.

Personal insurance for mortgage Art. 935 of the Civil Code of the Russian Federation is defined as voluntary. However, banks strongly recommend that their clients take out such insurance. It is optional, but its absence will result in an increase in the loan rate by at least 1%.

A similar situation has developed with regard to title insurance. The client has the right to refuse, but the loan, since it is more risky from the lender’s point of view, will be offered to him on other, less favorable terms than to those borrowers who agreed to fulfill the bank’s requirements.

Judicial practice in relation to such disputes indicates that in most cases the requirement to conclude a life and health insurance contract is recognized as an abuse of freedom of contract, since they refused to issue a loan without obtaining insurance.

According to the Directives of the Central Bank of the Russian Federation dated November 20, 2015 No. 3854-U, the borrower has the right to refuse the insurance product imposed on him within 5 days from the moment of signing the relevant documents. The amount paid by him must be returned in full.

However, the Central Bank of the Russian Federation explained that if the borrower refuses this service, the lender has the right to change the terms of the standard agreement and increase the interest rate.

This clause is already included in most mortgage agreements. Lenders also widely use their right to terminate the mortgage agreement unilaterally due to the client’s failure to comply with its terms. This provision is also stated in the loan documentation. The bank sends a notice to the client requiring him to either take out insurance, or he will terminate the contract. The latter means that the borrower is obliged to repay the entire loan amount or face legal proceedings.

Citizens' appeals (usually during legal proceedings) to the fact that the requirement for insurance violates their rights are not accepted: the agreement was concluded under certain circumstances, about which the client was warned in advance.

Signing the documents means agreement with the fulfillment of the requirements established by them.

Typical insurance cases

Insurance of a real estate property typically assumes as an insured event:

• fire, including one that occurred outside the insured property;
• household gas explosion;
• natural disaster;
• flooding that occurred as a result of an accident in the water supply, sewerage or heating system, even if the water came from neighboring premises;
• illegal actions of third parties (hooliganism, robbery, vandalism);
• falling of aircraft (parts thereof) onto real estate;
• identification of structural defects in the structure, which were unknown to the policyholder at the time of concluding the contract.

You need to be prepared for the fact that the minimum package offered by insurers provides for payments only when the insured property has suffered significant damage.

For example, if your neighbors' wallpaper was damaged as a result of a flood, there will be no payment, but if someone breaks a window, you can count on compensation for its cost. The entire loan balance will be paid only when the object is completely destroyed. In the case of a private house, if the foundation remains, then only part of the debt will be repaid, because, from the insurer’s point of view, the rest of the building can still be used to build new housing.

To get more guarantees and more compensation, you should take out more extended insurance, but it will cost more.

The next type of mortgage insurance is life and health insurance of the borrower. Insured events under such a contract are:

• death of the insured due to an accident or illness that occurred during the period of validity of the contract;
• loss of ability to work as a result of illness or accident with the assignment of 1 or 2 disability groups.

What is title insurance for a mortgage is easier to understand from the list of insured events under the following contracts:

• recognition of the sale and purchase as invalid (based on clause 2 of Chapter 9 of the Civil Code of the Russian Federation);
• demand from the buyer of housing (in whole or in part) by persons who retain ownership of the property.

This type of insurance is designed to protect the rights of a bona fide purchaser. Confirmation of the occurrence of an insured event will be a court decision. Payments under such agreements should compensate the borrower’s financial costs and guarantee the lender’s repayment of the loan.

In such cases, the insurance company has the right to provide full legal support, including representation of the client’s interests in court.

The problem of receiving insurance payments

The insurer has the right to refuse to pay insurance compensation in a number of cases. All of them are specified in the insurance contract.

Personal insurance for mortgage lending involves, as an insured event, the identification of the borrower with the 2nd or 1st disability group or his death. In this case, the payment is made in full as a one-time payment. In the first case, the property remains the property of the borrower, in the second it will be included in the inheritance estate and the heirs will receive it without any encumbrance (without collateral or the obligation to repay the loan debt). But for example, compensation under a life insurance contract will be denied if death occurred as a result of suicide or a car accident in which the policyholder was at fault. They will not pay compensation in cases where the client initially knew about health problems, confirmation of which the insurer will find in his medical records, but did not inform about this when concluding the contract.

There will also be problems with compensation for persons who have suffered from professional risks, as well as for those in whose blood at the time of the insured event alcohol or drugs are found that were not prescribed by a doctor. According to the law, the insurer in such a situation is not obliged to repay the debt.

If life and health insurance was taken out in relation to both spouses-co-borrowers, then in the event of the death of one of them, the debt to the bank will be repaid only by half, i.e. by 50% of the loan balance. If the insurance was made taking into account certain proportions, then the payment will be made taking into account how it was stated in the contract. For example, in the event of the death of one of the spouses, compensation may be 70% of the balance, while in the event of the death of the other - 30%.

In cases where there is no firm certainty that the insurance company’s refusal is correct, it is worth contacting a lawyer specializing in this area.

Already at the first consultation, having studied all the documentation, the specialist will be able to confirm or refute the legality of the insurer’s actions and suggest the advisability of protecting their interests in court.

How to save on mortgage insurance

The insurance program offered by the lender's employees is, as a rule, a product that is unprofitable for borrowers. Most banks act as intermediaries between the true policyholder, the organization with which the contract is actually concluded and which will subsequently make insurance payments if necessary, and the client. Accordingly, the lender most likely receives a discount from the “supplier” and at the same time makes an allowance to cover its own costs.

As a result, an insurance contract concluded in a bank office may turn out to be 10-20% more expensive than an agreement drawn up on the same terms either with the insurer itself or with its other official partner.

If you decide to purchase insurance directly from the insurer, check with the lender for a list of accredited companies. Despite the fact that any restrictions when choosing an insurance company are unacceptable by law, they can be established in spite of them. Therefore, it is still wiser to check with the bank for a list of accredited insurers.

Considering that the insured amount is calculated based on the loan balance plus interest that will be accrued over the next year, savings are possible due to early repayment of the loan.

The faster the mortgage debt is repaid, the less interest the borrower will pay, the less the insurance amount will be.

You should also consider the loan repayment date. Ideally, you need to determine the deadline for full repayment of the loan by the time the next insurance contract expires. If this does not work out, then you can, by obtaining a corresponding certificate from the creditor about the absence of debt, contact the insurer with a request to return part of the insured amount according to the actual time of existence of the loan obligation (debt to the bank).

How to properly insure yourself with a mortgage so as not to overpay. When determining the sum insured, insurers take into account:

• client's age. The policy will be cheaper for people who are 25-35 years old;
• the price of the property - the more expensive it is, the more the insurer needs to pay;
• with personal insurance, they may be asked to undergo a medical examination, based on the results of which the cost of the policy will be determined. The fewer health problems a person has, the fewer bad habits he has, the greater the discount he will be given;
• The larger the loan amount, the larger the insurance amount will be assigned for payment.

Resume

Mortgage insurance: required or not? An insurance contract for collateral property is required. The rest - formally no; in fact, the bank indirectly (through deterioration of lending conditions or even refusal to conclude a mortgage agreement) forces clients to agree to this requirement.

From a financial point of view, sometimes it is a little more profitable to agree to an increase in the loan rate, but refuse additional insurance.

Interest is accrued regularly on the debt balance, which decreases as payments are received to repay the loan, i.e. monthly or even more often. When determining the insured amount, the amount fixed at the beginning of the year is taken into account.

A reasonable solution to this issue is to comply with the lender’s request, but enter into a mortgage insurance contract directly with the insurance company.

The benefit of the borrower with mortgage insurance is that if an insured event occurs, although the bank will receive the payment, the citizen will be released (partially or completely) from the obligation to pay the mortgage.

In difficult times, which are designated in insurance as insured events (loss of property, disability, etc.), this can come in very handy.

Taking into account the above, we can say that a mortgage is a risky project for the borrower and the insurer. The bank, if it has a full package of insurance and collateral, risks less.