Mandatory Mortgage Insurance: What It Covers

Reviewed by Luiza Balojin, real estate agent, on September 24, 2026.

When you take out a mortgage in Romania, you hear about two or three insurance policies: the PAD policy, the home insurance the bank asks for and, sometimes, life insurance. Only one of them is required by law. The others may be the bank's conditions, and the rules on mortgage credit set clear limits on what the bank can ask of you and how.

Below, one at a time: what the law requires, what the bank may ask for, what rights you have and what changes on a Noua casă loan.

The only insurance the law requires: PAD

The PAD policy (Romania's mandatory home insurance, governed by Legea 260/2008) is mandatory for every home in Romania, with or without a loan. A mortgage neither adds to nor removes anything from that obligation.

The sum insured and the yearly price are set by law:

type A home: the sum insured is 100,000 lei and the annual cost is 130 lei;
type B home: the sum insured is 50,000 lei and the annual cost is 50 lei.

PAD covers earthquakes, landslides and floods, as natural phenomena.

What type A and type B mean and where to buy the policy are explained in our guide to the PAD policy.

For the bank, PAD comes first. No optional home insurance can be taken out without PAD (Legea 260/2008, art. 3), so the bank asks for it before any other policy on the home.

Is life insurance mandatory on a mortgage?

Not by law. No law makes life insurance mandatory on a mortgage.

The bank can, however, make it a condition for granting the loan. If it does, three rules in OUG 52/2016 (the emergency ordinance on mortgage credit for consumers) work in your favour:

You choose the insurer. The bank cannot make you buy the policy from a particular insurer. It must accept another insurer's policy if it offers an equivalent level of cover to the one required.
Only what the loan needs. The bank cannot ask you for insurance that is of no use to the credit agreement.
The cost shows in the DAE. Insurance that is mandatory for getting the loan is part of the total cost of credit, and therefore of the DAE (dobânda anuală efectivă, the annual percentage rate of charge).

In practice: ask the bank, in writing, whether life insurance is a condition of the loan and what minimum cover it requires. With that answer in hand you can ask other insurers for quotes too.

What home insurance the bank may ask for

On top of PAD, the bank may ask you, as a condition of the loan, for optional home insurance. That is the bank's condition, not a legal obligation.

The bank sets the sum insured and the minimum cover. Get them in writing before you look for quotes, so that you compare policies that meet the same conditions. The risks a policy covers and its exclusions are written in its insurance terms; read them before you sign.

Can you choose the insurer? What OUG 52/2016 says

OUG 52/2016, the act that governs mortgage credit for consumers, sets out in art. 12 what the bank can and cannot do:

Tying practices, meaning the loan is granted only if you also buy another financial product, are prohibited. Bundles (bundling of products) are allowed.
The bank cannot make you buy the required insurance from a particular insurer. It must accept another insurer's policy if it offers an equivalent level of cover to the one required.
The bank cannot ask you for insurance that is of no use to the credit agreement.

In short: the bank decides what cover it needs, you decide who you buy it from.

How insurance enters the cost of the loan

The insurance the bank requires in order to grant the loan is part of the total cost of credit, and therefore of the DAE. The DAE in a loan offer includes their cost, not just the interest.

When you compare two loan offers, compare the DAE, not just the interest rate. A lower interest rate can come with more expensive insurance, and the DAE puts everything into one figure.

What happens if you don't renew the policy the bank requires

If you let the policy the bank requires for the loan expire, the bank can take it out itself, in your name and at your cost. OUG 52/2016 sets conditions:

it notifies you in writing at least 15 days before the policy expires;
it takes out the policy for at most 1 year, at market price;
it sends you a copy of the policy within 15 days.

To stay the one who chooses the insurer and the price, note the expiry date of every policy and renew it on time.

Home insurance on a Noua casă loan (formerly Prima casă)

The Prima casă programme is now called Noua casă (the state home-loan programme). According to the programme page on the FNGCIMM website, the programme is open in 2026, with a ceiling of 500 million lei.

PAD stays mandatory, as for every home. The programme's rules (HG 717/2009) add their own rules on claim payouts:

for partial damage of at most 20% of the sum insured and at most the equivalent of 10,000 euros, the insurer pays the compensation directly to you, the owner;
above that threshold, up to 50% of the original loan amount, payment to you needs the agreement of the bank and of the state;
the rights under the insurance policies are split between the Ministry of Finance (Ministerul Finanțelor) and the bank.

Steps before you sign the loan agreement

Check or take out your PAD policy. Without it you cannot take out optional home insurance.
Ask the bank, in writing, for the list of policies it makes a condition of the loan and the minimum cover for each.
Get quotes from several insurers. The bank must accept a policy with an equivalent level of cover to the one required.
Compare loan offers by DAE, which includes the insurance required for the loan.
Note the expiry dates and renew your policies on time, so the bank does not take them out for you.

For the other costs of buying, see notary fees when selling an apartment or estimate them with the notary fee calculator (in Romanian).

Frequently asked questions

Is home insurance mandatory if you have a mortgage?

Yes, but by law only the PAD policy, which is mandatory for every home, with or without a loan. Optional home insurance is not required by law; the bank may ask for it as a condition of the loan, and it cannot be taken out without PAD.

How much does PAD cover on an apartment bought with a mortgage?

The same as for any home: 100,000 lei for a type A home and 50,000 lei for a type B home, at an annual cost of 130 lei and 50 lei respectively. If the bank wants more cover, it can ask you for an optional policy on top.

Can I take out optional home insurance without PAD?

No. Legea 260/2008 does not allow optional home insurance without PAD, except for buildings in seismic risk class I and for policies in which PAID is a co-insurer. Proof of PAD is the PAD policy or a policy in which PAID is a co-insurer.

Can the bank refuse a policy from another insurer?

Not if your policy offers an equivalent level of cover to the one required. Under OUG 52/2016, art. 12, the bank cannot make you buy the insurance from a particular insurer and must accept another insurer's policy with an equivalent level of cover.

Is unemployment or payment protection insurance mandatory on a mortgage?

No law requires it. If the bank asks for it as a condition of the loan, the same rules apply as for any insurance the bank requires: you can choose the insurer if the policy offers an equivalent level of cover, the bank cannot ask for insurance that is of no use to the credit agreement, and its cost is part of the DAE (annual percentage rate of charge).