Help on homeowners insurance problem - not sure what to do

[ssmdem]

We've already been discharged from our bankruptcy, and we have two properties that we surrendered in the bankruptcy, which neither bank has yet to begin foreclosure proceedings on. One is our home, and the other is a rental property that is currently vacant but that we are going to start renting again in the next month. Both properties have insurance policies that came up for renewal this month. Both were through Allstate, which has cancelled and raised rates all through Florida this year. Our rental property was transferred to another company for $100 more a year - not a problem. Our home though, the rates went up $1000 a year - up to $3400 a year!!! The rental property is only $700 a year because it only covers the property, not contents. We talked to our agent today who said we may be stuck with this ridiculous rate because she can't find a company who will take the policy with a bankruptcy on our history now at a lower rate.

My question is that I'm still a little foggy on how all of this works. We know the bank is eventually foreclosing. What happens if we do nothing? Leave the policies as they are and just see if the bank will pay them out of an already negative escrow account?? They actually did do that with the property taxes in the fall, but I'm seriously doubting they will do that with the insurance now. So, if we do nothing - the bank doesn't pay the insurance companies -- and we don't set up new policies and just let these lapse -- I know the bank will get notification and set up their own ridiculously priced policies and send us the bill. What happens if we don't pay that bill?? Are we legally obligated to - or can we ignore it since we've surrendered the properties?

[freeatlast09]

I'm no expert, but if the bank sees that the policies have lapsed, they will add their own insurance to cover the buildings and yes they will probably say you need to pay it. However, it will be added to the mortgage escrow account so you don't have much to worry about IMHO. Now, that crazy expensive policy that the bank will add will not cover your personal property so that is a consideration. I'm assuming you are still living in your home?

Others will no doubt chime in here about keeping insurance for liability purposes since you are technically still the owner until your name is off the deed, but still others will say that's not a big concern. It's been debated in several posts. I believe tobee43 is over 3 years now waiting for foreclosure and said the heck with any insurance.

[ssmdem]

We are still living in the house. I know it will only cover the property - but if they can't force me to pay it - only add it to my escrow account, I'm almost tempted to say forget it and find another policy for the contents and liability. I just don't want to do that and then end up having to pay the bank back somewhere in the future for the policy they set up. I don't mind paying the $700 policy for the rental, especially since we will still have tenants in there - but this $3400 bill is insane for our house!!

[freeatlast09]

If it were me, I'd just get another policy for your contents and let them rack up the escrow account.

In our case, (over two years waiting for foreclosure), we get an annual notice - 'you must carry insurance as part of your mortgage...blah...blah...blah' which is then followed by a notice of 'we have added lender placed insurance... blah....blah...blah'. Then if you read the letter carefully, you'll see that there is a sentence about 'if you have been discharged in a bankruptcy, this is for informational purposes only'. Just my two cents, but let the bank take care of it.