Is the world becoming uninsurable?

You can have a mortgage with no insurance (after purchase day) here in New Zealand. The bank won’t like it, but also won’t know.

Banks in Australia were the same, but some are now starting to demand proof of insurance yearly to counter that loophole.

What's the thinking here? The bank is loaning you money and they want to ensure you buy a particular product.

They're the ones with the money. They can easily guarantee that you buy the product they want. All they need to do is give you less money, buy the product themselves, and give it to you.

You can do that in the US too. As well the banks won't like it, so what they'll do is protect their assets with force-placed insurance that you pay a hefty premium for.

A quick google suggests a similar situation in that there's no legal mandate but most lenders in NZ require insurance.

You are right that you can get away with it in NZ.

For total loss then bankruptcy might save you money (assuming you have no other assets or kiwisaver; since you still owe the debt).

But part of the contract with the bank is allowing the bank and insurance company to verify/update.

If you cancel your insurance, the insurance company is incentivised to tell the bank since you will probably sign up for insurance again when told to by the bank. I don't believe the banks or insurance have push updates. I would guess banks batch check if insurance is still live annually?

I live in Christchurch and I believe insurance is valuable risk management - plenty of people gambled and lost with Earthquakes. That said: I own an as-is house because I bought a 3 bedroom on 800m2 for $190000 (cheap because you can't get a mortgage for it because it is uninsurable due to subsidence - I only paid land price).

I don't know what you mean. Banks loan out money for you to buy a house, but you don't technically own it (that is, you have no title) until it is paid off. The bank wants the house itself as collateral for the loan. It cannot be collateral if something destroys it in the 30 years or whatever during which you are repaying the loan. Therefore, they demand insurance to make sure that they will be repaid. The insurance requirement protects you but also the bank, because what do you think the odds are that someone who just lost their house in a fire or something is going to keep making mortgage payments for a pile of ashes?

I think what you mean is what I wasn't sure about (but found with a quick search), some banks do offer home loan and insurance bundles here in AU. I found one that offered a discount on the insurance if you get the loan with them, for the life of the loan.

But legally, you are allowed to change insurers at any time. They would probably not be allowed to include that as a contract-breaker clause in the loan itself due to free-market-reasons, or force you to take only their insurance to have the loan (we tend to have a few laws about keeping conflicts of interest like this at arms length but I'm not sure about this case). But if insurance is legally required, I suppose they can ask for proof periodically after you leave to terminate the loan.

The insurance is with anyone. They own the house, not you, and so they want to ensure it's not going to burn down (or more likely get washed away in a flood, where I live) and be irrecoverable, so they require you have the home insured. They care naught for contents insurance, just the house/building.

But if they're the ones that want the building insured, it seems like it would be better for everyone if they're the ones that source the insurance.

Is it different in the US to the UK? Surely you own the house and have a liability on the mortgage?

(For those unfamiliar - $190000 New Zealand is roughly $106,000 US, and 800m2 is about 1/5 acre. I know neither Christchurch real estate nor its geology - but obviously that 1/5 acre carries a big "will it keep subsiding?" caveat.)

When we bought our house in the UK (a long time ago), it was a condition of the mortgage that we had buildings insurance. The theory is that if the house burns down or similar, the bank will want the rest of their money back and the house buyer is unlikely to be able to afford that considering that they needed a mortgage in the first place.

It's basically the bank just outsourcing a lot of risk to the insurance company (via the house buyer).

Why would they go via the house buyer? They can insure the house themselves.

It's common for the house buyer to want extra insurance (e.g. contents) whereas the bank is only interested in the house as a sellable structure, so it makes sense for the buyer to take on the insurance requirement (it's also less paperwork for the bank).

Insuring the contents of a home is routinely done as an entirely separate matter from insuring the structure. All renters have to do it that way. You can do it that way in a rent-to-own scheme too.

We've got combined buildings and contents insurance, but yes they're often separate. My point is that owners want more from the building insurance than a bank cares about.

I can highly recommend buying property after a big earthquake - there's amazing bargains (lifetime wealth changing). I'm guessing more risky to buy after other disasters like fires or hurricanes or floods.

My land is not too bad actually (relatively) - heaps of other insured properties have similar slumping along the river or on the hills.

I've got friends with slumping issues - hidden nightmares for future buyers... In their houses you could feel the uneven floors before the earthquake and the earthquake just accelerated the problem. Pay attention when buying any house in an earthquake zone!!!

My house is actually fine -- only the ring foundation is broken and needs replacing. There are plenty of companies with the skills to do it reasonably, because it is a common issue in Christchurch e.g. a raft foundation.

The property was extremely cheap (less than half price) partly due to another issue - the driveway and front lawn gets flooded by the river occasionally (the house is high and dry).

Disclaimer: I like risk and can afford it.