When buying an apartment with a mortgage, a bank in Moldova may require insurance for the mortgaged property. Under the Mortgage Law, the mortgaged property must be insured in favour of the mortgage lender at replacement value against the risks of accidental loss or damage. At the same time, the bank may not impose a specific insurance company: the insurer is chosen from among the companies accepted by the lender. Before signing the policy, it is important to check the insured amount, covered risks, beneficiary, policy term, deductible and compliance with the loan agreement.
A mortgage is usually associated first of all with a loan agreement, an interest rate and monthly payments. But when taking out a mortgage, the buyer also has to meet certain requirements regarding the property used as collateral. One of them is insurance of the mortgaged property.
For the bank, this insurance is primarily a way to protect the collateral. If the apartment is seriously damaged, for example by fire or another event covered by the policy, the value of the collateral securing the loan may decrease significantly. Mortgage property insurance is therefore an important element in protecting the lender’s interests.
At the same time, a policy that meets the bank’s formal requirements does not always automatically provide the owner with the most useful level of protection. Before signing, it is worth understanding exactly what is insured, who is entitled to the insurance payment and what additional coverage may be useful for the owner.
Why banks require property insurance for a mortgage
In Moldova, insurance of mortgaged property is linked to the property’s status as collateral.
Under the Mortgage Law, the mortgagor is required to insure the mortgaged property in favour of the mortgage lender, at replacement value and against the risks of accidental loss or damage. If the borrower fails to do so, the lender may insure the property at the borrower’s expense.
This means that, in the case of a mortgage, the bank is interested in ensuring that the policy complies with the requirements of both the loan agreement and the mortgage agreement.
The CNPF also explains that when a home is purchased with a mortgage, the bank requires an insurance policy that usually protects primarily the property itself and is issued in favour of the bank.
What is usually insured under a mortgage
The main insured object is the property pledged to the bank as collateral.
Depending on the bank’s requirements and the terms of the insurer, the policy may cover:
- structural elements of the apartment or house;
- walls, floors and other parts of the building;
- interior finishes;
- engineering systems;
- certain renovation elements;
- additional risks if they are included in the contract.
It is important not to confuse insurance of the mortgaged property required for the loan with broader protection of everything inside the apartment.
For the bank, the main priority is that the property securing the loan is protected. Furniture, household appliances, electronics, personal belongings or civil liability towards neighbours may not be included in the standard mortgage policy unless they are added separately.
If broader protection is needed, you can also consider property insurance for your home, including renovation, furniture, appliances and other categories of property.
How the bank’s requirement differs from protection that is useful for the owner
There is an important distinction.
The bank needs protection for the collateral.
Its main concern is preserving the value of the property that secures repayment of the loan.
The owner needs protection for their own budget.
For the owner, not only the walls matter, but also the renovation, furniture, household appliances, liability towards neighbours and other risks.
For example, if a water leak damages expensive laminate flooring, the kitchen and household appliances, a policy arranged only to meet the bank’s minimum requirements may not cover all of these expenses.
That is why, when arranging insurance for a mortgaged property, it is worth asking separately:
- what exactly is considered part of the insured property;
- whether interior finishes are included;
- whether the contents of the apartment are covered;
- whether civil liability towards third parties is included;
- what additional coverage can be added.
You can read more about which parts of a home may be insured in the article “Can you insure only the contents of an apartment: furniture, appliances, renovation and personal belongings?”.
Which risks are included in standard coverage and what can be added
A basic mortgage property insurance package usually already includes the main risks associated with damage to or loss of the home. These generally include:
- fire;
- explosion;
- lightning strike;
- water damage;
- burst pipes;
- flooding caused by neighbours;
- natural disasters;
- theft;
- vandalism;
- glass breakage.
Civil liability towards third parties can be considered separately. This is additional protection in case you are responsible for causing damage to neighbours or other property.
Therefore, when taking out a policy, it is important to check that all standard risks are actually included in the contract and, if necessary, add civil liability coverage.
What to check in a mortgage insurance policy before signing
Insured amount
This is one of the key parameters.
Under the Mortgage Law, the property must be insured at replacement value. Specific requirements regarding the amount may also be set out in the loan agreement or mortgage agreement.
You should not reduce the insured amount simply to obtain a cheaper policy if doing so would conflict with the bank’s requirements.
Beneficiary
In mortgage insurance, the bank is usually named as the beneficiary to the extent of its financial interest.
This is important because, in the event of a serious insured loss, the insurance payment may first be used to satisfy the lender’s claims.
The law also provides that if the insurance compensation paid to the bank exceeds the outstanding amount of its claims under the loan, the difference must be returned to the borrower or their successors.
List of risks
Check which events are actually covered rather than relying only on the name of the insurance product.
It is especially important to compare:
- risks required by the bank;
- risks actually listed in the policy;
- exclusions;
- additional limitations.
Policy term
The policy must remain valid for the period required under the loan agreement.
A mortgage may run for many years, while insurance may need to be renewed periodically. It is therefore important to monitor the expiry date and avoid gaps in coverage if the loan agreement requires continuous insurance of the mortgaged property.
Deductible
The deductible is the portion of a loss that the policyholder pays themselves.
For example, if the contract includes a deductible, a small part of the damage may not be reimbursed by the insurer. With a mortgage, it is worth checking separately whether the bank accepts the proposed deductible and how it affects the policy price.
Exclusions
Even a broad list of risks does not mean that the policy covers every possible situation.
Exclusions may include:
- gradual wear and tear;
- pre-existing defects;
- previously known damage;
- improper use or maintenance;
- intentional acts;
- events that occurred before the policy became effective;
- other situations specified by the insurer.
Before signing, it is important to read the full insurance terms and conditions.
Can you choose the insurance company yourself?
Yes, but there is an important condition.
The Mortgage Law expressly provides that the insurance must be arranged with one of the insurance companies accepted by the mortgage lender, while the lender may not impose one specific insurer.
In other words, the bank may set requirements for insurers or approve a list of companies, but it should not require the policy to be purchased exclusively from one particular insurer.
Before paying for the policy, it is therefore useful to ask the bank for:
- requirements for the insurer;
- acceptable policy conditions;
- minimum insured amount;
- mandatory list of risks;
- rules for naming the beneficiary;
- deductible requirements;
- the required form of proof of insurance.
After that, you can compare available offers.
What documents may be required
The exact list depends on the bank and the insurance company, but the following documents and information may usually be required:
- passport or identity card;
- documents confirming ownership;
- cadastral extract;
- property address and area;
- year of construction;
- information about the type of construction;
- property valuation report;
- details of the loan or mortgage agreement;
- information about the bank as beneficiary;
- photographs of the property if requested by the insurer.
How a broker helps compare offers
Mortgage property insurance requires you to take into account both the bank’s requirements and the terms offered by different insurers.
An insurance broker can help:
- review the bank’s requirements;
- identify insurers that meet those requirements;
- compare insured amounts and limits;
- compare covered risks;
- check deductibles and exclusions;
- determine which additional types of coverage are genuinely useful;
- prepare an offer that can be coordinated with the bank.
Through Superpolis.md, you can submit a request for insurance of a mortgaged property and compare offers from several insurance companies. Superpolis operates as an insurance broker and helps select suitable terms based on the property and coverage requirements.
Common mistakes when arranging mortgage insurance
Failing to check the beneficiary.
If the bank must be named in the policy, incorrect details may require the document to be reissued.
Confusing the insured amount with the loan amount.
These are different figures. The insured amount is determined by the insurance terms and requirements for the property, while the outstanding loan is the borrower’s obligation to the bank.
Not reading the exclusions.
Important limitations are often found in the full policy terms rather than in the short policy description.
Failing to monitor the expiry date.
An expired policy may constitute a breach of the mortgage agreement.
Assuming that the bank-required insurance covers all property.
Standard coverage may primarily protect the real estate used as collateral and may not include furniture, appliances or civil liability towards neighbours.
Accepting one insurer immediately without comparing alternatives.
The law does not allow the mortgage lender to impose one specific insurance company, although the insurer must be accepted by the lender.
FAQ
Is apartment insurance mandatory for a mortgage in Moldova?
If the property serves as the subject of the mortgage, the Mortgage Law requires it to be insured in favour of the mortgage lender at replacement value against the risks of accidental loss or damage.
Who is the beneficiary?
When the property is insured in favour of the lender, the bank or another mortgage lender is usually the beneficiary to the extent of its financial interest.
Can I choose the insurer myself?
Yes. The bank cannot impose one specific insurance company, but the insurer must be accepted by the lender.
Do furniture and appliances need to be insured?
Not necessarily in order to meet the minimum collateral requirement. This depends on the bank’s requirements and the selected insurance product. If you want to protect the contents of the apartment, they should be included separately.
What happens if I do not renew the insurance?
If the loan or mortgage agreement requires continuous insurance, having no valid policy may be considered a breach of its terms. In addition, the Mortgage Law allows the lender to insure the mortgaged property at the borrower’s expense if the borrower fails to fulfil the insurance obligation.
Can civil liability towards neighbours be included in the policy?
Yes, if the selected insurer offers this option. It is additional protection that may cover damage caused to third parties, for example if you accidentally flood a neighbour’s apartment.
Is a property valuation required?
Often yes, especially if the bank already requires one when granting the mortgage. The insurance company may also request a valuation report or other information to determine the insured amount.
Is life insurance for the borrower required?
The Mortgage Law allows the mortgage agreement to require insurance of the borrower’s life and/or ability to work for the duration of the mortgage and within the outstanding amount of the obligation. This therefore depends on the terms of the specific contract and is not automatically required for every mortgage.
Choose a policy that meets the bank’s requirements
Mortgage apartment insurance in Moldova should be considered from two perspectives: meeting the lender’s requirements and protecting your own property.
Before taking out a policy, obtain the bank’s exact insurance requirements and check:
- the insured amount;
- the mandatory list of risks;
- the beneficiary;
- the policy term;
- the permitted deductible;
- requirements for the insurance company;
- additional coverage that you personally need.
This helps avoid a situation where the policy has been formally issued but needs to be redone for the bank or proves too limited when an actual insured event occurs.
→ Choose property insurance that meets the bank’s requirements