Homeowners Insurance & Surrendering a Property
If we surrender our home to the bank, do we still need to keep up our homeowner's insurance?
My husband and I have filed bankruptcy and have sent a letter of intention to the mortgage company indicating we have surrendered our home. We have not lived in the home for 2 months and have not heard from the mortgage company. How long do I need to keep the homeowners insurance on the home?
- When you are no longer on title it is safe to terminate your policy.
- Keep your policy if you are still in possession of the home.
- Send a letter to your bank notifying them you vacated the home.
I could not find any authoritative court cases upon which to base an answer to your question regarding retaining or terminating homeowners insurance following the quitting of a property and its surrender.
Bankruptcy and Foreclosure
Bills.com offers basic advise on bankruptcy and foreclosure will provides some information on what to expect after a bankruptcy is discharged. See also advise on utility charges after bankruptcy and foreclosure, which you may find beneficial. Bills.com has foreclosure information, which includes a glossary of terms and other FAQs.
Mortgage Payment Default
Though you do not mention defaulting on your mortgage payments, you need to learn more about the consequences of doing so. See the Bills.com resource on defaulting on mortgage payments and the consequences of doing so to learn more.
You mentioned you sent a letter to the bank to put it on notice that you have vacated the property. I suggest you send another letter certified mail to ensure that the bank receives the letter, and more importantly, that you have proof it received your letter.
You do not mention your state of residence or the location of your personal property. If you are renting, then it is advisable to have renter's insurance. However, if you stored your furniture in a storage facility, then from a practical perspective, you may want to retain your homeowners insurance to protect your personal property in case of fire, theft, or water damage while it is in storage.
Conservatively speaking, until the home is sold and you are no longer on title, retaining home insurance provides you coverage if the property is damaged by fire, vandals, or if a potential buyer slips and falls while touring the property. As I mentioned in the first sentence of my answer, I am uncertain if you or the bank has liability after you quit the property, and it is easy to envision scenarios where the homeowner has liability on property he or she has quit because the title of the property is still in the homeowner's name.
I hope this information helps you Find. Learn & Save.