Can We Cancel Umbrella Policy

[JayeB]

My question involves a foreclosure in the State of: Minnesota.


Our home is scheduled to foreclose on 2-17-11. Can we cancel the umbrella insurance policy that was required during the time we were able to pay the mortgage after the foreclosure date? We received notice that we can stay in the house for six months after the foreclosure and I'm wondering if the bank will then assume responsibility for coverage. TIA.

[Mr. Knowitall]

You mean, can you cancel your insurance for the home after title reverts to the lender (or goes to some other person after the foreclosure sale)? I don't see why not - you wouldn't own the place any more and wouldn't have an insurable interest.

I don't know what terms might be imposed in association with the agreement to stay in the home for six months. Obviously if you agree in association with that agreement to maintain insurance on the home, you'll have a continuing obligation to do just that.

[flyingron]

Umbrella insurance sounds like a supplemental liability insurance that you're never required to carry (an umbrella policy would be in addition to the underlying property insurance). Whether you cancel it or not is entirely up to your assessment of risk.

[Mr. Knowitall]

From what JayeB said, this was apparently a condition of the issuance of the mortgage. You can contractually obligate yourself to carry more insurance than would normally be expected to obtain a mortgage.