I recently worked with an independent broker to refinance my condo’s mortgage. The broker had locked me in to a good rate with MetLife.
During the refi process, I was notified that I would have to increase the insurance on my condo to 20% of its appraised value. This was due to one line of wording in our condo association’s documents that stated that the master insurance policy was â€œall-in, minus betterments and improvements.â€ I was told that because the policy wasn’t â€œall-in [period],â€ I’d have to take out this extra insurance.
This didn’t make any sense because, barring some wood floors that were refinished by a previous owner, there had been absolutely no betterments and improvements on my condo since construction. So what exactly was I being asked to insure? Nothing, but I was told that this was non-negotiable, even after getting a letter from my condo policy insurer that there was absolutely no question of coverage of my personal belongings and the aforementioned floors.
I talked to a lawyer who informed me that MetLife’s practice is actually illegal. You cannot ask someone to insure something that does not exist or double-insure the same property. If you do, then this is an incentive to â€“ as crazy as it sounds â€“ burn down your house for insurance. Still, MetLife would not budge. With the prospect of having to pay hundreds in unnecessary insurance indefinitely, I had to stop the refi process, losing out on hundreds in fees.
This ended up being a blessing in disguise because I immediately started the process over again with a local bank. For them, there was no question: â€œThere are no uninsured betterments and improvements? Then your insurance is perfectly adequate.â€ After my experience with MetLife, it was a relief to work with someone who was logical and reasonable!