Okay to not renew homeowners?

[adviceplease]

We are in pre foreclosure and the premium came due this month. It is normally paid for by the mortgage company and billed as part of our payment. I contacted our insurance company and they said because we filed BK and defaulted the bank is responsible for the home and I only need renters insurance. Is this okay, we probably will not be staying in the house unless the lender wants to make a major change on our payment.

[justbroke]

If the bank is already paying the insurance through escrow, they are likely to continue to pay. However, there is "some" exposure due to liability. Generally speaking, the bank will only carry hazards insurance related to the loss of the property and not any liability insurance (for claims against you). This is an area where you'll have to decide yourself. My opinion is that if the bank is paying the premium on your behalf, then you have an insurance policy.

I'm shocked that an insurance agent didn't mention liability.

[adviceplease]

Thank you for the reply. I am not sure if they are paying any of it at this point. The Home Owners was in my name but they would bill the lender. As of right now it has been 20 days and the lender has not submitted any payment. I put the renters on which covers my belongings and injuries (300,000 for injury, is this liability?) etc in the home but the home, garage, and property is not covered to damage. I was told that since I had a contract with the lender to keep the insurance but have since defaulted they are responsible for insuring the property if they want to because since I did not reaffirm I am not really the owner? They also said that in Michigan home owners is not required. Help?...lol.

[justbroke]

Well, you are really the owner unless and until a new deed is recorded with your recorder of deeds. IN other words, merely surrendering a property in bankruptcy does not change the ownership! Only a transfer of deed can do that, either through foreclosure, sale, or some other deed transfer (such as deed in lieu of foreclosure).

If the rental insurance includes liability, then that it is good!

[adviceplease]

Thanks again for the reply. I called my insurance company and they said that I have personal liability that would cover someone coming on the property if I was negligent like not shoveling my snow and the mail person falls, but they said I need to see if I have insurable interest in the home? What does this mean? I am post BK and in pre foreclosure I though the home was no longer considered mine? The lender is giving me a run around returning my calls.

[justbroke]

An insurable interest would be equity in the property. If there's no equity, there's no insurable interest to protect, other than liability which you have.

[adviceplease]

Okay, thank you. I am just terrified of getting sued because someone walks up my driveway and falls, or the house burns down and the mortgage company comes after us for only having renters.

[drowning123]

Should I ignore my lender's letter threatening me to have hazard insurance? They claim that if they have to purchase hazard insurance, I could incur debt. Is this true? I cancelled it a few days ago. I did not reaffirm the house, and it's in pre-foreclosure.

[HomeNow2]

My understaning was pick up renters insurance for your personal property. It is no longer YOUR house.

Any other insight????

[drowning123]

Seems like that's the typical answer, Home. Get liability in case anyone injures themselves and get renters insurance.

[justbroke]

Should I ignore my lender's letter threatening me to have hazard insurance? They claim that if they have to purchase hazard insurance, I could incur debt. Is this true? I cancelled it a few days ago. I did not reaffirm the house, and it's in pre-foreclosure.

No... it was discharged. The hazard insurance is standard boilerplate; they usually escrow the insurance. They are getting hazard insurance to protect their interests, and they should. You are not responsible for carrying hazard insurance. However, make sure you have renter's insurance with a good liability policy.

Just to say it again... liability is probably worth it in the long run. Some renter's policies will include liability insurance.

[drowning123]

Thanks, just. I'll get liability. They can pay their own "forced-placed" hazard insurance. Thanks.