Can a Bank Force You to Take Out Insurance with Them?

Nov 26, 2018 | Insurance

seguros obligatorios bancos

[vc_row css=”.vc_custom_1542889947742{margin-top: 60px !important;}”][vc_column][vc_column_text]compulsory bank insuranceA few days ago, at our insurance brokerage, we read the article “Remind your client… banks cannot force them to take out insurance with the mortgage”, and we thought it deserved a mention on our insurance blog.

So, in addition to highlighting the general ideas of that article, we also did some research on Twitter about the subject.

The article refers to a study prepared by HelpMyCash, whose conclusions were that the bank must explain, if the client asks, that it is not compulsory to take out life and home insurance with the bank. What the bank may do is offer better mortgage loan conditions if the client decides to take out those policies with them.

One possible strategy mentioned is for the client to accept taking out these policies during the first year in order to obtain the loan on favourable terms, and then negotiate at renewal.

We recommend reading the article, especially because of the comments it contains. Here is the link:

http://www.profesionaldelseguro.com/recuerdaselo-a-tu-cliente-los-bancos-no-pueden-obligarle-a-contratar-un-seguro-con-la-hipoteca/

As mentioned above, we researched what was being said on Twitter about this topic and highlighted the following tweets:

The previous tweet links to the post we have just mentioned.

CAN BANKS FORCE YOU TO TAKE OUT INSURANCE WITH A MORTGAGE? http://t.co/z2hTgAnH6z #INSURANCEBROKERS - Tuplancomercial.com (@tuplancomercial) 24 September 2015

This other tweet includes a link to a very complete article that also begins by referring to the HelpMyCash financial comparison report. The second part of the post is much more interesting because it explains three client rights:

  1. The client who takes out a mortgage is not obliged to take out any insurance policy unless this has been signed in the contract.
  2. When taking out a policy linked to the mortgage loan, the client has the right to choose the payment method, whether annual payment or single premium.
  3. The client cannot be forced to take out insurance with a single premium or for more than 10 years. This goes against Article 22 of Law 50/1980.

The following tweets also refer to the same finanzas.com article that we have just summarised.

The following tweet from @segurodeti includes a link to an article on their blog published in May of that year.

Can they force me to take out insurance in exchange for granting me a loan? http://t.co/Lu25RZLKVl Know your #rights with #banks

- Seguro de ti (@segurodeti) 10 May 2015

Conclusions on Whether Banks Can Require Insurance to Be Taken Out with Them

In conclusion, this remains a very controversial topic. As things stand, the bank may change the conditions of the mortgage loan depending on whether the client has taken out life and home insurance with the bank or has not subscribed to those policies with it.

However, there are certain client rights, as discussed above, that must be respected.[/vc_column_text][/vc_column][/vc_row]

Vida SR
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