What Types of Insurance Are Required with a Mortgage Loan?
When applying for a mortgage loan, banks typically require property insurance against fire and random events. Additionally, depending on the offer, a bridge insurance policy (valid until the mortgage registration in the land and mortgage register) and low down payment insurance may also be required. Each bank may have different requirements, so it’s worth reviewing them with a financial expert.
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What Is Bridge Insurance and Why Is It Required for a Mortgage?
Bridge insurance is additional protection for the bank during the period between the loan disbursement and the official registration of the mortgage in the land and mortgage register. It protects the bank from risks before the loan is fully secured. The cost of this insurance is added to your monthly loan installment and automatically stops once the registration is completed.
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What Is Low Down Payment Insurance?
This insurance is required when your down payment is less than 20% of the property’s value. It protects the bank in case of repayment issues. While it increases monthly loan costs, it allows you to secure financing with less upfront capital.
Is Life Insurance Required with a Mortgage Loan?
Life insurance is often not mandatory, but banks may offer lower loan margins if you choose to purchase it. Life insurance serves as additional protection — if the borrower passes away, the insurer covers the remaining loan balance. It can be a smart choice, especially for long-term financial commitments.
Can I Cancel an Insurance Policy Before It Expires?
Yes, in most cases, you have the right to cancel an insurance policy before it expires. However, if the insurance is linked to a mortgage loan, you may need to present a new policy that meets the bank’s requirements or renegotiate loan terms.
What Is Liability Insurance (OC) and Is It Mandatory for Vehicle Owners?
Liability insurance (OC) is mandatory for all vehicle owners. It protects you from financial consequences of damages caused to third parties in the event of an accident or collision. Driving without valid OC insurance results in significant financial penalties.
What Are the Penalties for Lack of Valid Liability Insurance?
Failure to maintain valid liability insurance in Poland results in heavy fines imposed by the Insurance Guarantee Fund (UFG). As of January 1, 2025, due to the increase in the minimum wage to 4,666 PLN gross, these penalties have also increased.
Penalties for passenger cars:
• No OC for up to 3 days: 20% of the full penalty, i.e., 1,866 PLN.
• No OC for 4 to 14 days: 50% of the full penalty, i.e., 4,666 PLN.
• No OC for over 14 days: 100% of the full penalty, i.e., 9,332 PLN.
Penalties for other vehicles:
• Trucks, tractors, and buses:
• Up to 3 days: 2,800 PLN.
• 4 to 14 days: 7,000 PLN.
• Over 14 days: 14,000 PLN.
Motorcycles and mopeds:
• Up to 3 days: 310 PLN.
• 4 to 14 days: 780 PLN.
• Over 14 days: 1,555 PLN.
Driving without valid liability insurance can not only lead to financial penalties but may also require you to cover accident-related damages out of pocket. Ensuring continuous coverage is essential.
What Are the Benefits of Personal Accident Insurance (NNW)?
Personal Accident Insurance (NNW) provides compensation for permanent health damage or death resulting from an accident. It can cover incidents both in everyday life and while driving. This insurance offers additional financial security for you and your family.
Can I Hold Multiple Insurance Policies of the Same Type?
Yes, you can hold multiple insurance policies of the same type, and each can pay compensation in the event of a covered incident. This is common with life and health insurance policies, enhancing your level of protection.
What Are the Consequences of Not Having Required Insurance for a Mortgage Loan?
Failure to maintain the required insurance may result in the bank applying additional costs or even terminating the loan agreement. The bank also has the right to add its own, often more expensive, policy to your monthly installment. To avoid such situations, ensure you renew your policies on time.