In online insurance articles, there is quite often information that double insurance makes sense only in the case of protection of life or health. We can often find out that the purchase of a second policy protecting, for example, a house or premises will be unprofitable. Generally, this is true, but … not in every case. It is worth considering the situation of borrowers.
UNILINK insurance experts explain why housing loans holders sometimes, after all, should buy a second policy protecting the credited property (next to insurance with the assignment required by the bank).
Double insurance: there is a general rule
At the outset, it is worth referring to the provisions of the Civil Code, which regulate the issue of double property insurance. Thanks to this, we can understand better where the mentioned argument about the senselessness of the purchase of two policies protecting one house or premises comes from. “Article 824 is of key importance in this context1
Civil Code ” – informs Andrzej Prajsnar, an expert of the UNINELK insurance multiagency.
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Mentioned provision of the Central Committee (Article 8241) indicates that in the event of insurance of the same subject of protection in a minimum of two societies (from the same risk and to sums exceeding the insurance value of a given subject together), the policyholder will not be able to demand the payment of a benefit greater than the value of damage. “According to the general rule of property insurance, the insurance benefit cannot be higher than the damage suffered by the injured party,” explains Beata Borkowska, an expert in the UNILINK insurance multiagency.
We also have an exception from the general principle
In accordance with the provisions of the Civil Code (Article 8241 par. 2), in the event of double insurance of the item for sums exceeding its value, the societies are proportional. The proportion of the sum of insurance from a given policy to the total sums resulting from double or multiple insurance is decisive.
A different exception to the rules described above is more practical. Namely, with double real estate insurance (or other item) we do not deal in the event of insurance of the property interests of various persons referring to the same good, as well as in the case of concluding several insurance contracts with complementary, i.e. mutually complementary [zobacz: D. Maśniak [w:] Civil Code. Updated commentary, edited by M. Balwicka-Szczyrba, A. Sylwestrzak, LEX/El. 2024, art. 824 (1)].
The above principle is confirmed by the resolution of the Supreme Court of November 30, 2005 (file reference number: III CZP 96/05). We read in it that the rules set out by Article 8241 Paragraph 2 of the Civil Code (related to double property insurance and payment of compensation) do not include the situation “in which the property's property interests, which are the subject of insurance, are different, even if they refer to the same property good.”
Typical double insurance does not occur when a loan apartment has been covered by one policy that protects the bank's property interest (due to the assignment) and the second insurance providing actual protection for the borrower. “I am talking about a frequent situation in which the lender requires not only home or apartment insurance, but also the assignment of compensation rights from the policy,” adds Beata Borkowska, a uniline multiagency expert.
Insurance of a house or a premises with a assignment will protect the bank
It is difficult to hide that housing insurance with a assignment to the bank protects the financial interest of the lender, despite covering the costs of the premium by the borrower. In the event of a lot of damage, the bank will receive compensation compensating for the risk associated with the loss of the value of the property encumbered with a mortgage. The banks' policy regarding the requirement to have real estate insurance in connection with the loan granted and the assignment varies. “It is not a situation, for example, in which the assignment of rights regarding compensation includes the payment of benefits from the policy to the current value of the loan granted, but while maintaining the borrower's right to receive small compensation (e.g. up to PLN 5,000)” – notes Andrzej Prajsnar, UniLink expert.
There is also quite a case in which the borrower purchased a policy with the lowest possible sum of insurance accepted by the bank (e.g. similar to the current loan value). “Bank customers often also choose the narrowest possible scope of protection for credit insurance (e.g. only wall protection), assuming that they will buy further housing insurance for their needs,” comments Beata Borkowska, an expert in the UNINLK insurance multiagency.
The agent helps not only when choosing another policy
A large group of borrowers understand that a loan policy with a low sum insured will not provide them with real protection. People with a large own contribution, who purchased the required real estate insurance with a minimum sum specified by the bank (e.g. equal value of the loan), have a greater motivation to buy a second policy. This situation results in a lack of any protection for the surplus above the current value of the credit liability. “In the event of total damage, the assignment from the policy will ensure the repayment of the remaining credit debt, but a large part of the damage will not be compensated,” warns Andrzej Prajsnar, UniLinek expert.
Another possible problem for the owner of the property concerns the reduction of payments for less damage due to undoubtedly. It is worth emphasizing that in in the case of failure to protect the apartment or house so -called Principles of proportion.
It should be remembered that the principle of proportions in insurance is generally applied in the event of undestructive, when the sum insured is lower than the actual value of the insured property, which may result from its incorrect or intentionally low estimated estimation. As a consequence of the application of the principle of proportion, the compensation paid by the insurer is reduced in the same proportion as the amount of insurance corresponds to the value of the subject of the insurance on the day of damage (and not the conclusion of the insurance contract).
Increase in insurance or a separate policy
In order to avoid problematic situations, it is possible to buy a second housing policy. Another option is to properly increase the sum of the required insurance, which is related to the loan. “For clients of a large part of banks, the high sum insured (equal to the value of real estate) will be compulsory, because some lenders do not accept the sum insured at the level of only the loan value,” says Andrzej Prajsnar, an expert of the UNILINK insurance multiagency.
With a mortgage, it is also worth noting that the housing policy required by the bank usually covers only walls in the event of burning, flooding, lightning or overvoltage. Movable equipment from destruction and theft can be insured separately with a second policy. We do not have to conclude it with the insurer indicated by the lender. This is particularly important for valuable items, such as electronics, antiques or works of art.
All the issues described above may seem complicated to future and current borrowers. However, this does not change the fact that insurance protection in relation to the acquired property On credit is a very important topic. It is good to discuss it both with an insurance agent and a credit advisor before taking a loan. Only then will it turn out what variant is the best. “We are talking about an extended policy from a bank offer or cheap protection of walls for credit purposes and a second, wider insurance or a properly extended policy outside the bank's offer, which the lender can accept,” sums up Beata Borkowska, an expert in the UNILINK insurance multiagency.
