Homeowners in Colombia are seeking clarity on insurance coverage and mortgage obligations following a recent earthquake that destroyed residential properties [1, 2].
The situation is critical because families who lose their homes often remain legally responsible for bank loans despite the loss of the physical asset [2].
Insurance experts said that homeowners' insurance can cover damage to destroyed houses, provided the policy includes specific coverage for seismic events [1]. The process for filing a claim typically requires documentation of the loss, though experts said that procedures exist for those who lost their physical documents during the disaster [1].
A primary concern for many affected families is the status of their mortgage debt. In cases where a house is destroyed, the debt to the bank does not automatically disappear [2]. The insurance payout is generally used to settle the outstanding loan balance first, with any remaining funds going to the homeowner [2].
Experts said that homeowners should review their policies to determine if they have comprehensive coverage or limited protection. If a property was not insured, the homeowner remains liable for the full amount of the mortgage regardless of the building's condition [2].
Fasecolda, the federation of insurance companies, has provided guidance on how to handle these reclamations to ensure families receive the support they are entitled to [1]. The process involves notifying the insurer immediately and providing a detailed inventory of the damages [1].
Families are encouraged to contact their financial institutions to discuss potential restructuring of loans if insurance coverage is insufficient to cover the total debt [2].
“The debt to the bank does not automatically disappear.”
The intersection of natural disasters and financial obligations creates a precarious situation for low-to-middle-income homeowners. Because mortgage debt is tied to the loan agreement rather than the physical existence of the structure, the lack of comprehensive seismic insurance can lead to permanent financial insolvency for families who have lost their primary asset.
