Is home insurance mandatory for a mortgage?

Just because the bank offers us to add all kinds of insurance when we take out a mortgage doesn't mean that we have to accept them all . Is home insurance mandatory for a mortgage? Short answer: no . Long answer: there are nuances to consider. Aren't you curious?

According to the law (Law 5/2019) , it is not mandatory to sign any home insurance with the mortgage or any other type of insurance , but the lender may force us to contract certain coverages that are usually included in the home insurance .

Yes, only These covers are not the multi-risk insurance that is usually offered by financial institutions and, of course, not the mandatory one that is marketed by the bank that offers us the mortgage.

What home insurance is mandatory for a mortgage?

Article 8 of Law 2/1981 and Article 7 of Law 5/2019, better known as the new Mortgage Law, establish which insurance is mandatory with the mortgage. Specifically, the text states that “the lender may require the borrower to take out insurance against damage to the mortgaged property”, while ratifying the provisions of the previous law.

What does that mean? That the bank can only force you to take out fire and damage insurance, of which the bank will normally be the beneficiary. That is what compulsory home insurance in the mortgage consists of. The rest of the coverage? They are extras that we do not have to take out.

In fact, the new mortgage law clarifies that the bank cannot even force us to accept its insurance. What is more, “it must accept the contracting of alternative insurance policies (…), provided that the coverage conditions are equivalent,” the law stipulates. And again by law, these coverages can only refer to damages to the property, provided that the appraisal value and the insured sum match.

In short, we are not obliged to take out multi-home insurance with the mortgage (another thing is that it is highly recommended) and, in addition, we can force the bank to accept the one we choose if it forces us to take out insurance.

At Hipotecas.com we believe that everything can be simpler and that is why we do not force you to take out home insurance or any other insurance with us. What's more, We don't even give you a bonus on your mortgage by offering better conditions if you do so, because we always give you the best mortgage we can without any additional effort.

Of course, if you want to have a home policy, we have a tailor-made insurance plan .

Should we take out home insurance or not?

Just because something is not mandatory does not mean that it is not advisable. Is home insurance with a mortgage mandatory? Absolutely, and not only because of damage to the home. All good home insurance must have good civil liability coverage, which is responsible for dealing with any damage that may be caused to our home.

This is what will compensate our neighbour if we flood their bathroom due to a leak in ours or, even worse, if we burn down their house. Without this coverage, we will be the ones who have to pay. Even if the damage is small, without insurance and civil liability, we will have to take care of all the paperwork ourselves, from finding and hiring a plumber if we don't want to have 'trouble' with the neighbour. If we are at the end of the month or we have a lot of work, it is easy for us to let it go and that will make the relationship with the neighbours suffer.

And home insurance not only saves you money, it can also save you more than one argument. .