Under Art. 12(3) of Emergency Ordinance 52/2016, the bank may not force you to use an insurer it has approved and must accept an equivalent policy from another insurer.
If you fail to renew, the bank may insure in your name for up to a year, at market price, only after written notice 15 days before the policy expires.
One bank's leaflet shows a premium of 0.04% a month of the loan balance: about 80 lei a month at the start on a 200,000 lei loan.
Mortgage insurance in Romania: the short answer
A Romanian mortgage usually comes with up to three policies. The first is PAD, the compulsory disaster policy every home in Romania must have by law. The second is property insurance on the home, assigned to the bank for as long as the loan runs. The third is life insurance on the borrower, which some banks offer as an option and some ask for.
The law that governs mortgages for consumers, Emergency Ordinance 52/2016, gives you one important right: the bank may not force you to insure with a company it has approved. It must accept a policy from another insurer if that policy gives an equivalent level of cover. And a policy that is compulsory for the loan must be counted in the total cost of the credit.
In plain words: the bank decides what must be insured and for how much. You decide with whom, as long as the cover is equivalent.
The three layers of home insurance, PAD, optional cover and the bank's requirement, are explained in our guide to home insurance in Romania. This article goes one step further: what the mortgage itself changes, what the law lets you negotiate and what the policies cost.
The three policies at a glance
| Policy | Required by | What it covers | Who receives the money | Published cost |
|---|---|---|---|---|
| PAD | Law 260/2008, for every home | Earthquake, flood, landslide | The owner (assigned to the bank if the bank asks) | 50 or 130 lei a year, by type of construction |
| Property insurance | The bank, as a loan condition | The building, by policy: fire, water, storm and more | The bank, while the loan runs | Set by the insurer; ask for quotes |
| Life insurance | Some banks offer it as optional; check your offer | Death, often total permanent disability; some add unemployment | The bank, up to the loan balance | One bank's published leaflet: 0.04% a month of the loan balance |
Sources for the costs are in the sections below. Premiums for property insurance are not published as a single tariff; each insurer prices the home.
PAD: the floor, not the mortgage policy
PAD is sold at a fixed price of 50 or 130 lei a year, depending on the type of construction, and covers earthquake, landslide and flood only. It is the same whether or not you have a mortgage. The bank will want to see it in place because, as a rule, the optional policies are issued on top of a valid PAD.
PAD is not what protects the bank's loan. Its cover is capped and it ignores fire and water damage. That is why the bank asks for a second policy.
Property insurance assigned to the bank
The bank asks for insurance on the building, usually for at least the loan amount or the value set by the bank's valuation. The policy is assigned to the bank (cesiune), which means that if the house is damaged, the insurer pays the bank first, up to what you still owe.
Three practical points:
- The bank sets the minimum cover, not the insurer. Ask for it in writing, in lei or euros, before you look for quotes.
- The assignment ends with the loan. After the final repayment, ask the insurer to remove the bank from the policy. See releasing the mortgage after payoff.
- Renewal is your job. If the policy lapses, the bank has a remedy, described below.
Life insurance: optional at some banks, so ask
Life insurance pays the bank the outstanding loan balance if the borrower dies, and often covers total permanent disability.
Banks treat it differently. Banca Transilvania says life insurance is not compulsory for a mortgage, and that a policy you already hold can be enough. UniCredit's document list includes a request to join the bank's life insurance "only if you choose" it. Other banks may set it as a condition or price the loan differently with and without it. The only reliable answer is in your offer.
What a bank-distributed policy looks like, from published product documents:
The bank decides what must be insured and for how much. You decide with whom.
| BRD Asigurări de Viață (BRD mortgages) | Intesa Sanpaolo Bank leaflet | |
|---|---|---|
| Age | 18 at entry, under 71 at the end of the cover | 18 to 64 at entry |
| Term | Equal to the loan term | Linked to the loan term |
| Death | Pays the loan balance | Pays the balance and accrued interest, capped at 60 days of interest |
| Other cover | Total permanent disability from accident | Temporary incapacity and involuntary unemployment, up to 9 instalments, by status |
| Premium | Rate applied to the loan balance on each due date | 0.04% a month of the loan balance |
Sources: BRD product information document and Intesa Sanpaolo Bank leaflet (2022 file; check current terms).
The age limit matters for older buyers. If the policy ends before the loan does, the bank may want a shorter term. More in a mortgage in Romania after 55.
What the law lets you negotiate
Article 12 of Emergency Ordinance 52/2016 is short, and every borrower should know it:
- No forced insurer. The bank may not require you to insure with a company it has approved (Art. 12(3)).
- Equivalent policy accepted. The bank accepts a policy from another insurer if it has an equivalent level of cover (Art. 12(3)).
- No useless insurance. The bank may not ask for insurance that is not useful for that credit agreement (Art. 12(8)).
- If you forget to renew. The bank may take out the policy in your name and at your cost, for at most one year, at market price, but only after written notice at least 15 days before the policy expires, and it must send you a copy within 15 days (Art. 12(4) to (6)).
A buyer who lives abroad should set renewals on autopay. A policy bought by the bank in your name is legal, but you lose the choice of price.
How insurance enters the cost of the loan
Under Article 3 of the ordinance, the total cost of the credit includes insurance premiums when the insurance is compulsory to obtain the credit, or to obtain it on the terms offered. That cost then shows up in the annual percentage rate (DAE).
The trap is the reverse case. A policy described as optional may not be in the DAE, yet the bank may offer a lower margin to borrowers who take it. Compare offers on the full monthly outlay: instalment plus all premiums.
A worked example
A loan of €210,000, which is 70% financing on a €300,000 home (buyers from abroad get up to 70%, with at least 30% of their own capital). Using the published 0.04% a month as an illustration only:
| Item | Calculation | First year |
|---|---|---|
| Life insurance, month 1 | €210,000 × 0.04% | about €84 a month |
| Life insurance, year 1 | about 12 × €84, falling slowly with the balance | about €1,000 |
| PAD | 130 lei a year, type A home | about €24 at about 5.35 lei per euro |
| Property insurance | by quote | ask two or three insurers |
The life-insurance figure falls as the balance falls. The rate is one bank's leaflet, not a market average. Your bank's rate is in its offer. To put the instalment and the insurance together, use how to calculate a Romanian mortgage payment.
Checklist before you sign
- Ask the bank in writing which policies are compulsory, the minimum sum insured and whether the margin changes without life insurance.
- Get two or three quotes for property insurance from insurers outside the bank, with the bank's required cover.
- Check the DAE shows the compulsory premiums.
- For life insurance, read the age limit, the exclusions and the medical questionnaire before you sign it.
- Buy PAD in your name from the day the home is registered to you.
- Set every renewal on autopay and send the new policy to the bank on time.
- After payoff, remove the bank from the policies.
Frequently asked questions
Is life insurance compulsory for a mortgage in Romania?
Not by law. It depends on the bank. Banca Transilvania states it is not compulsory for a mortgage, and UniCredit lists it as optional. Other banks may require it or offer better terms with it, so check your loan offer.
Can I use my own insurer instead of the bank's?
Yes. Under Article 12(3) of Emergency Ordinance 52/2016, the bank may not force you to use an insurer it has approved, and it must accept another insurer's policy with an equivalent level of cover.
What happens if I forget to renew the property insurance?
The bank may take out a policy in your name and at your cost, for up to one year, at market price. It must first notify you in writing at least 15 days before your policy expires and send you a copy within 15 days.
How much does mortgage life insurance cost in Romania?
There is no single tariff. One bank's published leaflet shows 0.04% a month of the loan balance, about 80 lei a month at the start on a 200,000 lei loan, falling as the balance falls. Your bank's rate is in its offer.
Is PAD enough for the bank?
No. PAD covers only earthquake, flood and landslide, with capped cover. Banks ask for property insurance on the building as well, assigned to the bank.
The bottom line
Insurance is part of the price of a Romanian mortgage, not an afterthought. The bank sets what must be covered. The law lets you choose the insurer, as long as the cover is equivalent.
Ask for the list of required policies with the approval in principle, get outside quotes and compare offers on instalment plus premiums.
If you want to go through a bank offer and its insurance conditions, book a 30-minute call with me.
Moti Azulay, Compass Group Romania
Sources: Emergency Ordinance 52/2016 on credit agreements for consumers relating to immovable property, consolidated form (legislatie.just.ro), Art. 3 and 12 · PADROM: compulsory home insurance · BRD Asigurări de Viață: product information document · Intesa Sanpaolo Bank: mortgage life and unemployment insurance · Banca Transilvania: life insurance questions · UniCredit Bank: required documents
This article is for general information only and is not legal, insurance or financial advice. The rules are correct as of 22 October 2026. Premiums and policy terms are set by each insurer and bank; every mortgage is subject to the bank's approval.
Now you know more.
This article is general information, not legal, tax or financial advice. Consult local professionals before any transaction.
