Mortgage insurance is renewed every year, and many people simply pay whatever the bank offers. Yet the law allows you to choose an insurer yourself, and a well-chosen policy often costs noticeably less. Let us look at what is mandatory, what is not and how to save without putting your interest rate at risk.
What is mandatory and what is not
| Policy | Status |
|---|---|
| Insurance of the collateral — the flat or house — against loss and damage | Mandatory under Article 31 of Law No. 102-FZ "On Mortgage" |
| Borrower's life and health insurance | Voluntary, but affects the rate |
| Title insurance — the risk of losing ownership | Voluntary; the bank may offer it as a condition for a lower rate |
Mandatory collateral insurance covers the structural elements: walls, floors, load-bearing structures. The bank does not require you to insure the finishes and contents — that is your decision.
What happens if you drop the voluntary policies
If under the loan agreement the rate depends on life insurance and you did not renew the policy or take out new cover within 30 days, the bank may raise the rate. The increase is limited by Law No. 353-FZ: the new rate may not exceed the rate the bank applied at the time of issue to comparable loans without insurance. So before dropping the insurance, compare the annual premium with the extra interest.
Why the price changes every year
- The outstanding debt goes down — and with it the sum insured, so the premium usually falls.
- The borrower gets older — the life insurance tariff rises.
- Health and occupation — new diagnoses or dangerous work affect the tariff.
- Insurers' tariffs differ — the same cover costs different amounts.
How to save: 7 ways
1. Compare insurers
Law No. 353-FZ allows a borrower to take out insurance themselves with a company that meets the bank's requirements, and the loan must then be provided on the same terms. Banks publish their requirements for insurers and policy terms. Request quotes from several companies within that range.
2. Check the sum insured
The sum must match the outstanding debt, plus a margin if the bank requires one. Get a statement of the outstanding debt as of the renewal date from the bank — there is no point insuring the original loan amount.
3. Split the risks
If the bank allows it, insure the property with one company and your life with another. This makes it easier to find the best tariff for each risk.
4. Do not overpay for title
Look at the loan agreement: for how long does the bank require title insurance? Often it is needed only in the first years after buying a flat on the secondary market, and for a new-build bought from the developer it may not be required at all.
5. Allocate co-borrowers' shares
If there are several co-borrowers, the bank may allow each to be insured in a share corresponding to their income. The tariff for a younger or healthier co-borrower may be lower.
6. Renew on time
Start comparing a month before the policy expires. Being late risks a rate increase, and buying on the last day leaves little choice.
7. Change insurer on the renewal date
If you cancel the current policy in the middle of the year, as a general rule under Article 958 of the Russian Civil Code the premium for the remaining period is not refunded unless the contract provides otherwise. It is better to move to a new company when the old policy expires.
Step-by-step renewal
- Get a statement of the outstanding debt and the bank's current insurance requirements.
- Request quotes from several insurers that meet these requirements.
- Fill in the health declaration honestly: inaccurate information is a common reason for a refused payout.
- Pay for the policy and check that the bank is the beneficiary and that the sum insured and term match the requirements.
- Send the policy and proof of payment to the bank before the old policy expires — via the app, your personal account or a branch — and keep confirmation of receipt.
Mistakes that cost a lot
- An incomplete health declaration. If the insurer finds out that an illness was concealed, it may challenge the contract and refuse a payout exactly when it is needed most.
- The wrong beneficiary. Under a mortgage policy the bank must be the first beneficiary — otherwise the bank will not accept the policy.
- An address or cadastral number that does not match the mortgage agreement — the bank will return the policy for correction, and you may not make it before the old one expires.
- Keeping quiet about changes. If you have moved to a more dangerous job or started a redevelopment, check the insurance rules: the insurer must be notified of material changes.
- Paying without proof. Keep the receipt and the policy itself: without proof of payment the bank may consider the obligation unfulfilled.
If the policy has already been paid with the bank's partner
Voluntary life insurance taken out when the loan was issued can be cancelled within 30 days, and after full early repayment you can get back part of the premium for the unexpired term. Details are in "How to get a refund of loan and mortgage insurance".
The mortgage insurance calculator will help you estimate the cost of a policy. Polis Re specialists will select mortgage insurance from companies that meet your bank's requirements — send us a request. Finishes and belongings can be protected with a separate home insurance policy.