When buying a property, it is essential and even mandatory to take out borrower insurance, because it allows you to protect yourself against the various hazards that life can unfortunately have in store for you. Similarly, although this type of guarantee protects you, it must be understood that it also represents a guarantee of security for the lending institution. Through this article, we will study together what these specificities are in terms of contracts, and we will also talk about the insurance offered directly by banking establishments by comparing them to the competitive market. Here are some answers.
Mandatory insurance that protects in the context of a property loan
As we have just pointed out, borrower insurance is now mandatory if you want to be able to access a mortgage loan. By opting for this type of guarantee, as an insured person you will be covered against risks that could impact your ability to repay your loan. Indeed, if unfortunately, you were to lose your job, be unable to work, become disabled, or even worse if you were to die, this insurance takes over to reimburse the lending organization in your place. In addition, this protection also secures the lender by promising to reimburse the monthly payments in the event of a problem. It is therefore a guarantee that is aimed at the different parties. If you would like to know more about this type of protection, and to protect yourself against this type of inconvenience, Keep in mind that banks and insurers will do their best to find you the solution that best suits your situation.
The difference between borrower insurance and home insurance
Borrower insurance, as we have just explained, can cover the risks that are linked to your credit. On the other hand, home insurance fulfills a completely different role. First of all, you should know that home insurance is not mandatory although it is seriously recommended. The latter usually covers damage that may be caused during a disaster in your home. For example, it can intervene in the following cases:
- a fire;
- a flight
- acts of vandalism;
- water damage.
Of course, this list is far from exhaustive and you should contact your insurer to find out about any claims that may be covered by home insurance.
Bank insurance VS private insurers
It is important to keep in mind that if you choose a bank to access credit, the latter almost systematically offers to include borrower insurance in your contract. However, you should know that the law requires the various banks likely to grant you a loan to accept a contract other than theirs if it is your choice. As a result, you have the possibility of playing the competition and opting for an organization other than that of the lending banking institution.
