Bank unethical practice forced client insured property risk. We love and hate the bank. They forced us to take an insurance policy when the property loan is approved. Someone called them they are the licensed loan shark or legalized Mafia bully the poor and apple polishing the rich. I had a nasty experience with one of the bank staff.
Bank Loan approved
“Mr. Jamin, your housing loan is approved. Please sign on the dotted line on a blank house owner proposal form with a sum insured for a quarter of million. In the event of a fire, you can claim for the said amount.”
“Only fire? What about the storm and tempest, impact damaged or bush or falling, subsidence landslide?
“No, only fire, Mr. Jamin”
“Sorry, no signature, I use my own insurer which is also your panel of the insurance company.”
Fire insurances
I brought 2 fire insurances on the building with all the necessary perils, I assigned a quarter million assigned to the bank another balance $600 000 to my own name to avoid the average clause in the event of an either partial or total loss. Another householder policy to cover fire and full theft for the house content.
Victim
My investor in the unit trust or mutual fund holder was a victim of the bank. I could not help her when signed the fire insurance proposal form as I went oversea excursion with my whole family.
Land Building
She purchased a corner lot land residence building, the property was earlier converted into a commercial lot. She took a 90% margin loan out of 2 million on the purchase price. The bank gave her a favorite low-interest rate with 8 units of condominium plus a small scale factory building in the same year with the same bank. Everything went through smoothly without a hiccup, but not every day was a sunshine day.
The fire razed the building to the ground due to short-circuit. No injury. The car repair workshop closed on Sunday.
Verdict
“Mr. Jamin, can I get back the sum insured of 1.8 million dollars? It was 10 years loan tenure. another 5 more years to service the loan.
“No way, you cannot get the full sum insured as it depends on the reconstruction cost recommended by the fire adjuster. I am not sarcastic, but true, let us wait for the final adjuster claim report.” I consoled her.
She could only claim for 700 000 dollars based on the finalized claim report. Speechless and dumbfound on seeing the recommendation as she overinsured her property and paying the extra premium to the drain.
“Why you take the bank word as gospel after all money is not a problem to you. Take it as a costly lesson learned” I scolded her in her office.
The bank often takes the panel of the real estate appraiser’s valuation report as a guide to insured the property. The 2 million dollars building comprises of (1) the element of profit, (2) the land price tag. Both are not taking into consideration in the event of a claim. The insurer only indemnified you for the loss the building prior to the fire occur. The property appraiser and the bank have a shallow deep knowledge of insurance. Be wise to consult the insurance broker who has the insured’s best of interest. The bank just acts as an agent to the insurer, who has to obey the rule and regulation lay down by the insurer.
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There is a lot to buying real estate and commercial real estate that the average person just cannot know. It’s great to have articles like these to alert to the real costly problems that can occur when getting information from banks and insurance companies. You don’t know what you don’t know. Thanks for an informative article.
Thanks for reading my article and giving me valuable comments. It is wise to check out with other sources to find out the real agenda that bank and insurer don’t like to the consumer to know. It is their best-kept secret.
Hi ..
Actually this situation happens in more countries.
In my opinion, banks should not be allowed to sell insurance, even because insurance agents have their own training to do so, they are constantly being updated with new laws and new products while bank agents have only sales training and Bank applications and issues.
It is good for this site to inform people of these situations.
Yet I must say that in every profession there are good and bad professionals. A good insurance agent must inform the client of all the guarantees of the contract and any exclusions and deductibles that may exist.
Thank for reading my article and giving a valuable comment.
Yes, indeed, the bank should not be cross-selling, just focus on their financial products and leave the insurance to the insurance agent or broker who is trained for this kind of professional job
I love and hate the banks that I deal with. They seem to be a necessary evil in many regards. Their greed here in the States with the big lenders caused the housing crash several years ago. It was a hard time as it affected certain industries and causes higher than usual unemployment.
Anyway, sometimes it hard to educate yourself and know the insides of particular bank lending actions, especially on property appraisals and insurance practices. I admit I am a novice about such things. I usually bring my lawyer into the fray with me when buying and selling property.
Thanks for a good post, very insightful.
TD Bauer
Thank for reading my article and giving me a valuable comment.
Yes, the subprime mortgage crisis affecting the Americans livelihood all due to the greedy banks.
Oh dear,
That’s why I always “attack” every single insurance person that is coming my way. I want to know what my money does. The insurance people deserve their commissions but not on overcharging premiums.
People should learn more about insurance and understand the confusing terms they use.
Thank for reading my article and giving me valuable information.
It is wise to learn insurance as it is a daily affair affecting our daily lives.
Interesting to know how banks are really not knowledgeable at all in insurance dealings. Thanks for sharing the information. I think it is advisable to consult your certified insurance agents and ask for their opinions before buying any property. Maybe the insurance industry should put more efforts into raising awareness about the many types of insurance and how it works etc.
Thank for reading my article and giving me a valuable comment. In fact, the Malaysian Insurance industry still in the infant stage, unlike the USA, UK or Australia, you need a degree in insurance to become an insurance agent.
This is such an informative website! I enjoyed this article very much. There is a lot to watch out for…lots of scams out there and lots of unethical practices. Thank you!
All the best to you,
Sue
Thank for reading my article and giving me the valuable comment. Yes, there is a lot scam out here. Let the buyer be aware.