is a homeowners insurance policy higher for a bank owned property?

Asked by Abear, Naperville, IL Mon May 21, 2012

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Satwinder Ka…, Agent, Bolingbrook, IL
Mon May 21, 2012
no, insurance is a gainst the amount borrowed,
1 vote
Shahzana Ripp, Agent, Bolingbrook, IL
Mon May 21, 2012
I have sold many bank owned/foreclosed properties and have not had any issues with the homeowners insurance. I will suggest you to shop around as there are many insurance companies out there.
If you give an insurance company both auto and home , you get a multi-policy discount. This will save you money on your home and auto.
Good Luck!
Shahzana Ripp
1 vote
Donald Steve…, Agent, Fontana, CA
Thu May 24, 2012
A Homeowners policy is based on the current condition of the home and the owner of the home. If the new owner has a history of claims, that can follow you to your next home. The fact that a bank owned the home will not effect your new insurance policy when you buy the home but the current condition of the home may effect which company will insure the property, the coverages they will offer, and how much they will charge. Homes with repair issues like an old roof, missing or damaged siding, and water damage inside the home are some issues you can encounter with a ban kowned property. They are properties that are sold as is. The damage could be from the previous owner who obviously was not financially able to maintain the home or the bank may not maintain the home since they are in the business of home lending and not property management.

Depending on the condition of the home you may have to get insured with a speciality homeowners insurance company until you can repair the home at which point you can pursue a more traditional policy which will usually have a lower rate with better coverages.

Donald Stevens
0 votes
Tamara Schus…, Agent, Naperville, IL
Tue May 22, 2012
Homeowners policy is based on the home, where it is located, similar homes, appraisals etc. Who the original owner does not make a difference. Check with your insurance agent for more information. Premiums if anything may possibly be lower if the home value is down because of the shape the home is in. Land always has a value but the value of the home may vary depending on its worth. Your insurance agent will be your best guide.

However, because I am a Real Estate Agent experienced in selling bank owned foreclosures, I am thinking that your referring to the bank owned properties that have had the appliances pulled out of them, copper piping gone, furnace and a/c missing etc. In this case when the property has been completely gutted the property would be worth less until you fix it up. Now to go on further if the property has water problems and mold that is not taken care of, this possibly could effect what type of insurance you qualify for and you may be a great risk unless these problems are fixed.

Great question to ask.

Tamara Schuster
Prudential Naperville Illinois
0 votes
Inaas Arabi, Agent, Naperville, IL
Mon May 21, 2012
Hello Abear,

Thanks for using for getting answers to your questions..

although you have had great answers below I felt compelled to answer you as well because you have the same name as my younger sister.. :):)

anyhow, there is an insurance score for any property, this is similar to your individual credit score but for houses. it is based on area, house, how many claims it had and couple of other issues, this is what effect your policy price. Being a bank owned should not have any effect on policy price.

by the way if you were told by some insurance agent that you are going to pay more because the home is a bank owned and it did not have insurance on it before then you need to walk away from this agent and find another one as all properties esp. bank owned ones are insured. I would suggest to shop around to make sure you are comparing rates..

good luck to you and do let me know if you need any further help with any of your real estate needs..

Inaas Arabi
Option Realty Group
0 votes
, ,
Mon May 21, 2012
Looks like this has been answered thoroughly. Let me know if you need the name / number of a good insurance agent. I was in the insurance for 12 years before getting into mortgages 8 years ago and I still have a number of good contacts who can offer you options from multiple insurance companies.
630-470-6722 office
0 votes
Hi Jeff on a bank owned property,, does the bank have home owners insurance, who would be the carrier, ,,,if it burns down while they are trying to sell is it insured ,,thanks Mark
Flag Sun Apr 3, 2016
Keith Kreis, Agent, Naperville, IL
Mon May 21, 2012
property insurance is based on the property and on the individual for quotes on the price. Being bank owned should not be relevant regarding this house. The property should be subject to the surrounding areas and similar properties of that type of home. I am not an insurance agent, but have sold many foreclosed properties and have not had an issue with the homeowners insurance.
Keith Kreis
Phone: 630-281-2507
Cell: 630-673-0306
Fax: 866-604-8698
Charles Rutenberg Realty
1733 Park Street Suite 150
Naperville, IL 60563
A Referral is the greatest compliment you can give me !
0 votes
Suzanne Hami…, Agent, Orland Park, IL
Mon May 21, 2012
The homeowner's policy is insuring the home, not the seller, so it does not matter. Where the home is, your credit rating, your age, the type of home, replacement cost, deductible, etc. and more importantly the insurance company and their rates are what makes it different. Also, if you are going to occupy or rent it makes a big big difference.

Shop around a lot. There are a lot of companies out there and the rates differ unbelievably. And if you give them the home auto - multipolicy, that is the best savings.

Also, if you want to know about the consumer rating of the company, look on consumer reports, jd power or call the state department of insurance. You can find all online and they have a lot of good information.
0 votes
, ,
Mon May 21, 2012
Ron is hitting on the right answer, it isn’t a home owner’s policy if it is owned by the bank, so insurance coverage would cost more while the bank owns it. Once you buy it you can use a regular HO policy then the cost depends on the company you choose for insurance.

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
0 votes
Tim Moore, Agent, Kitty Hawk, NC
Mon May 21, 2012
An insurance company will not care who the previous owner was. I have never seen this be anything of an issue with a HO policy.
0 votes
Ron Thomas, Agent, Fresno, CA
Mon May 21, 2012
If the Bank has to enforce a policy on a foreclosure, because the Homeowner has let it lapse,
then you will find that it cost more than if the Homeowner had kept their policy.

Does this answer your question?
0 votes
yes and no, I am the previous owner and held thepolicy until the receiver came up with this policy which as part of the terms of lease I am to pay. Previously the policy was approx. 885.00
Flag Mon May 21, 2012
Tina Lam, Agent, San Jose, CA
Mon May 21, 2012
Being previously bank owned isn't a factor that's considered by insurance companies.
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0 votes
this property is currently owned by the bank and i am paying the insurance, which is said to be 2250.00 a year.
Flag Mon May 21, 2012
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