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0 pointsRK15y ago0 comments

A few years ago, he opens his mail to find a notice that his premiums are doubling, requiring a $1,000,000 insurance policy in the event the home is destroyed and needed to be rebuilt.

This sounds like a mortgage rate increase is in turn requiring a larger insurance policy. Honestly it's hard to parse that sentence in a way that makes sense to me.

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2 comments · 2 top-level

ianferrel15y ago

I believe it meant that his insurance premiums were doubling due to a (new?) requirement that his house have $1mil insurance.

I admit the article is incredibly unclear, but I don't see how an increase in mortgage rate would result in increased insurance premiums.

prakashk15y ago

I thought it was probably due to increase in premiums on the Homeowners' Insurance policy which is required by the lender, so that they would not incur the loss in the event that house (on which the lender has a lien on until it is fully paid for) is destroyed by a fire or some other damage. Many borrowers contribute to an escrow account (maintained by the lender on the borrower's behalf) which is used to pay the insurance premiums and also property taxes. When the insurance company decides to increase the premiums (which happened to me last year), the lender would notify the borrower to contribute more to their escrow account.

I am not sure if that's what happened in this case, but it does make sense to me.

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