Archive for the ‘Home Insurance’ Category
Insurance disencumbrance
The purpose of this insurance is to pay the total debt of real property in the event of death of the debtor holder. There are three fundamental aspects to be taken into account on it, Robertson said:
1 – Sobreasegurado and adjustments
The expert believes that in general is “unfair” not to adjust the value of the policy decreases as the loan balance when dividends are paid. This would result in the debtor is insured for an amount higher than it should, ie it is sobreasegurado.
“When you hire you are securing insurance for the full balance at the end is the total credit. While you pay is going to diminish the balance, so you’ll have to pay less for insurance, “he explains.
The expert said that in general adjustments are agreed annually or every five years, considering that people take at least 20 years to pay off a mortgage. “A logical adjustment would be every two years, according to the balance,” he adds.
Dis-encumbrance insurance seeks to not breached the obligation to pay the total credit to the heirs of the debtor. “It ensures that ultimately speed up the credit, so do not have to pay the entire balance of a single ‘umbrella’” says Robertson.
2 – Death of “cosign”
It is common that many people apply for joint mortgages, such as spouses.
Robertson explained that in these cases, the disencumbrance insurance policy must be clearly established operates insurance in case of death of a spouse.
For example, if either of you dies, that percentage will be covered by the credit debt.
3 – Pay no commission:
If the debtor dies when it has paid only a proportion of credit, insurance disencumbrance cover the entire remaining balance. But this payment is not made in installments, as payment of dividends, but only once. “It will produce a kind of prepaid credit,” said the expert.
In general, banks charge fees for prepaid developed such voluntary payments or the total debt.
Robertson explains that when banks lend money, plan their future income. When a client decides to shorten the payment period unilaterally, and pays the full credit, “affect the bank’s revenue projections and change the game rules, modified further the interests.” That is why banks, under the acceleration of payment, for a fee.
However, it is expressly provided in the case disencumbrance insurance, you can not charge this fee to the heirs.
Besides having to hire a disencumbrance insurance when applying for a mortgage, it is mandatory to have fire insurance.
When recruiting this insurance coverage must be evaluated the same, considering that exceptions provide banks and insurance companies. For instance, we assess whether they are covered other appurtenances of the building, as the warehouse of a department. “You have to review policy by policy, but is negotiable,” said Matthew Robertson, tax area expert with Ernst & Young.
Fire insurance rates
The fire insurance associated with mortgages should be distinguished from fire insurance for damages against third parties.
Insurance against third party damage can account for the damages cause to other property as a result of fire in real estate. For example, if a person is burning the department, the insurance liability for any damages that are generated in other departments.
“If I burn the department, the above could fill with smoke and the bottom could be damaged by heat. The damage that occurs is rather peripheral, not only affects my property, but also all others. On an issue of welfare, requires that in case they burn my apartment, I take out insurance to the value of the remaining “exemplifies Robertson.
She adds that managers also need to hire a building fire insurance for the “common places”, policies that should be met through the common expenses.
The expert said that there is a bill that was introduced in 2001, which creates another compulsory insurance against fire, which requires that each property of more than 150 UF is secured. “This insurance covers damage to the house itself, while the other covers damage to third parties,” he says.
Insurance value
Robertson explains that the value associated with the mortgage insurance should be the cost of rebuilding, “which ultimately is the market value less the cost of land,” he says.
However, there are no provisions that require the use of this method of calculation (market value less land), preventing the future owner to make a personal appraisal, hiring a professional to determine the value of reconstruction (materials, age of your house, etc.). , and “under that personally negotiate with the insurance company,” says Robertson.
However, it is noteworthy that, as a general rule of the Superintendencia de Valores y Seguros, the formula for calculating the value of insurance “must be at least this: market value less land,” said the expert.
Consider that the attributes are not perishable property as having “ocean view” are included in market value, because “if I’ll burn the house to continue watching the sea,” he adds.
Are you sure custom or general?
By hiring a sure-fire, a person will have two choices: get a tailored contract or a general. Keep in mind that the first will be considerably more expensive than the latter, since it will hire an appraiser and the policy will probably be more expensive.
To decide which option is more convenient, Robertson recommended to evaluate which is the position of the individual against the risk. “If risk-averse, will want to be insured for everything, not just fire, but also earthquakes, lightning, lightning, theft, vandalism, etc.” He explains, and therefore to the extent insurance is the best option.
For those who just want to fulfill the obligation to take out fire insurance when applying for a mortgage, we recommend a general. “If you just want to follow the law, most likely for you to invoke one of the contracts already made, general insurance, no specifics that are made for each person,” said the expert.
He adds that the calculation of the price of general insurance, ie “market value less land” is information that is provided by the same bank and therefore the person does not require an appraiser.
What about insurance when you pay off the credit?
The tax area expert Ernst & Young explains that certain “extinguished” once paid the claim, since they are ancillary obligations.
The acquisition of a mortgage has associated a number of additional expenses, including fire insurance and disencumbrance, both mandatory and required to access this type of loan.
Matthew Robertson, tax area expert with Ernst & Young, explains that the law itself does not require hiring, but are the Superintendency of Banks and Financial Institutions (Sbif) and the Superintendencia de Valores y Seguros (SVS), which establish this obligation to the banks, and therefore customers should assume these responsibilities.
This implies that banks give mortgages to people if they do not hire such insurance.
Robertson explained that the rules of the superintendents require the hiring of two specific insurance: fire and disencumbrance, but not earthquakes.
However, many take advantage by hiring the fire policy to cover for other risks such as earthquakes. “This is because strictly speaking, insurance does not cover fire or arson own acts, and in some cases acts of vandalism, but depends on the policy,” said the expert.
What institution can provide such insurance?
Both banks offer loans as insurance companies may offer such insurance. This is because the credit applicant is under no obligation to stay with the policy offered by the bank, and has the power to negotiate directly with an insurance company.
Robertson explains that when a person negotiates mortgage credit conditions in the bank and says he wants to hire their insurance with an insurer, the bank must give a certificate stating the minimum requirements for applying for the contract. With that certificate, the client must go to the insurers to contribute.
The certificate specifies the conditions required for access to mortgage credit, as the property appraisal value, coverage, risks that are required, payment terms. The document says the expert, “is the way for the bank to inform insurers that is what you need to read the contract, or which are the minimum conditions of employment insurance.”