homeowners insurance during fc? confused!

[seriously]

I had added this to an existing thread that was mainly the same topic, but I think I was trying to revive a thread that was too old: trying new thread now (with some edits)

The other day, I mentioned to my ins guy that the house was in FC and asked him if I move out, do I need to do anything special w/the ins. I thought it was a perfectly valid question, since my atty had told me I needed to keep ins-- just wanted to do it the correct way. Well, ins guy replied that as far as he knew I would be living in the house and we never had this conversation. Whoops. This leads me to believe that if I were to vacate the house, my ins policy would be somehow void.

My atty told me that I could move wherever, whenever I wanted as long as I informed the bank that I was leaving, and kept ins on the house. I had been planning to move this spring--it's only b/c I suddenly developed a health problem, that I'm not in another state already. If my ins bills were being mailed to another state, my phones in this area code were turned off, etc etc--it would be pretty hard to say that I was still living in this house, no? And then if something happened that I needed the ins for, would I be screwed? I'm already bk, lol.

Due to my health problem, I need to stay in this area (in this house or not) another 6 mos. Hopefully the FC situ will rectify itself in that time; it's already been almost a year since I stopped paying mortgage. BUT. What should I do about the ins if I want to leave before bank sale? Should I call the bank & ask them to insure the damn thing? Try and find another insurer? Or do I really have to stay here until the bitter end? NY state fwiw.

Thanks very much for any advice/personal experience you can give!!

[Miguel]

I am not an expert in this field but I think that your insurance will not become void if you move out of the house. I think that you should call up the insurance company and get it clarified. Maybe your insurance guy made a mistake.

[StartingOver08]

Actually, the insurance could become void. Look at your policy. Getting insurance for a vacant house (in our area) is almost impossible.

That is specifically why your insurance person said what he said. He is supposed to log all of that information. Maybe one of the insurance people on this site can jump in to give clarification.

As to the bank putting on insurance, yes. They will "force place coverage" if you let your policy lapse or the insurance co cancels you because you vacated the house. The problem with that type of insurance is not only its extreme cost (it is usually at least 3X's what you normally pay), but the coverage only covers the lender and the structure. Nothing inside.

[Chazlyn]

I can tell you from very recent experience, that as soon as my Insurance company found out my fc home was vacant, they dropped me like a hot potato!!! And I then received several letters from BOA threatening to charge me $3500 a year for THEM to get hazzard insurance on the property- which would only cover the property and not liability coverage for ME if someone were to get hurt on the property, etc... So they forced me to obtain vacant property insurance, which is DOUBLE what I was paying for homeowner's insurance.

[BCA2009]

Wow, three threads in this forum dealing withthe same issue at the same time. The OP in this thread didn't indicate whether they had been discharged in BK or not. That is the issue here. Once you are discharged in BK you no longer owe the bank anything and have no responsibility to protect the property. If the bank wants to insure it they are free to, but you don't have to.

If you are just being foreclosed on, you still have an obligation to pay the note. After the foreclosre sale takes place, they will sue you for a deficiency. According to the terms of the prommisary note/mortgage, you agreed to keep insurance on the house. If you don't they can "charge" you for it. But all that really means is they will add it to the amount you already owe them. You've already decided you are not paying that back so who cares if they add to the balance. It will just increase the deficiency judment later.

Lets say you don't pay the insurance and the bank fails to get any either (which isn't going to happen, they have blanket polices to cover this). But lets just assume.

Then the house burns to the ground with no insuance. What is the bank going to do? thay are going to auction off the empty lot and then sue you for the deficiency.

So, if you have filed BK or are going to, you don't need to worry about protecting the property from damage.

If you are not planning on filing BK and hope to pay off the deficiency after the foreclosure sale, you probably would want to keep it insured to prevent the deficiency for going up if the property became damaged.

The only other consideration is that until the deed is out of your name, you own the property, so if some vagrant breaks in and falls down the stairs, he might sue you for his medical bills and pain and suffering. So if you are really worried about liability issues, you may want to keep it insured. But don't worry about damage to the property.

[Flamingo]

What everyone needs to know if in the mire of the foreclosure process that as long as that property is in your name, it needs to be insured; not to have insurance on it is lining you up for all sorts of trouble; all it takes is one person to slip and fall on that property and get hurt prior to transfer of title and not only will you be facing foreclosure, you will be facing a lawsuit which can be filed up to two years or so after the incident (depending on statute of limitations) which would be long after the fact of filing bankruptcy.

[BCA2009]

Flamingo, The liability issue is a real concern. and I'm not suggesting people ignore it. I'm just pointing out that after discharge in BK, you have no responsibility to take care of the property.

It may be cheaper to purchase a umbrella liabilty policy, rather than insuring the home specifically.

[neorecon]

BCA2009 that isn't really true. BK releases you from the lien on the property (money owed) but it does not remove you from the TITLE on the property. That doesn't happen until the foreclosure process has been completed and the bank takes over the TITLE to the house.
Until then your name is on the title, and as such you are at least partially liable for the property. This is also why banks have been dragging their feet with foreclosures because as soon as they take over the TITLE, they become the owner of the property and must show it on their books.

[flower04]

Ok,not to muddy the waters, but can you have renter's insurance on a rental that you live in and homeowner's insurance on a house that you don't live it but is being fc on? Haven't check with our insurance yet.

[neorecon]

Possibly, but the issue is most home-owner's insurance companies do not, or will not insure a vacant home. Usually once they catch wind that you're not living in the home anymore they will drop your policy ASAP.

[BCA2009]

BCA2009 that isn't really true. BK releases you from the lien on the property (money owed) but it does not remove you from the TITLE on the property. That doesn't happen until the foreclosure process has been completed and the bank takes over the TITLE to the house.
Until then your name is on the title, and as such you are at least partially liable for the property. This is also why banks have been dragging their feet with foreclosures because as soon as they take over the TITLE, they become the owner of the property and must show it on their books.

Please explain what liability you have to take care of the property that would require insurance.

I agree you still have title to the property, but there are no requirements that you have to have insurance on property that you own. If it is destroyed in a hurricane, you would have no liability to rebuild or restore the property.

In my earlier post I did address the personal liability issue, where you could be sued if someone got hurt on your property, but you don't need regular homeowners insurance for that. Just a general liability policy.

[Chazlyn]

I'm very new to all of this and I'm just speaking from my own personal experience (I live in PA). But my attorney also advised that I maintain insurance on the property until the deed to the home is out of my name. No insurance company would cover me, so I had to get insurance through a company called Foremost, that deals with foreclosed homes.

Flower04, when I moved out and started renting, I had both Homeowners (on the vacant property) and Renters insurance.

[broken64]

I have read all of these posts and understand because of liability the insurance coverage. My question is how do ya know when the deed is out of your name!!!

[Flamingo]

Please explain what liability you have to take care of the property that would require insurance.

I agree you still have title to the property, but there are no requirements that you have to have insurance on property that you own. If it is destroyed in a hurricane, you would have no liability to rebuild or restore the property.

In my earlier post I did address the personal liability issue, where you could be sued if someone got hurt on your property, but you don't need regular homeowners insurance for that. Just a general liability policy.

When you get into risk questions such as this, it is always best to discuss your particular situation with your attorney and also your insurance agent to protect oneself as much as possible during the foreclosure process. Everyone's situation is different but the liability risk is too great to me to be avoided by anyone.

[Mensa1]

The other day, I mentioned to my ins guy that the house was in FC and asked him if I move out, do I need to do anything special w/the ins. I thought it was a perfectly valid question, since my atty had told me I needed to keep ins-- just wanted to do it the correct way. Well, ins guy replied that as far as he knew I would be living in the house and we never had this conversation. Whoops. This leads me to believe that if I were to vacate the house, my ins policy would be somehow void.

When you get into risk questions such as this, it is always best to discuss your particular situation with your attorney and also your insurance agent to protect oneself as much as possible during the foreclosure process. Everyone's situation is different but the liability risk is too great to me to be avoided by anyone.

Apparently seriously's Ins Agent didn't want to be part of the conversation. LOL

I wonder if the agent would be willing to... "under oath, state that he never had that conversation...?" I think time for a new agent, OP.

Yes, there is contingent liability in any real estate owned by the property owner, especially if the property is empty. However, the practical side of this is if the owner is insolvent, what would any Plaintiff in a suit be able to get? Not that anyone would want this problem hanging over their head, but I can see that if it comes down to feeding the kids or continuing the ins on the property, the choice is an easy one. If funds are available to purchase the ins w/o compromising basic needs of life, then get the ins. If you cannot afford the ins then best to inform the lender in writing that there is no ins coverage for the structure and any liability thereon. The mtg lender will surely obtain coverage on the strucutre and may also have some form of liability covg, but this may vary from lender to lender.