How Do You Change Homeowners Insurance With An Escrow Account?

Examine Your Current Insurance Coverage

Check for coverage gaps and determine what you're searching for in your future policy. Check out our page on how to change home insurance for more information on what to look for while assessing your existing plan.

Make Comparisons

Compare rates for comparable coverage options from various companies, and inquire about any additional incentives they may offer (such as new customer discounts, rebates on home repair, or smart home gadgets) if you decide to switch.

Purchase A New Policy

It is recommended that you purchase your new coverage before canceling your current one. This eliminates coverage gaps. Because you get to choose the effective date of your new policy, you can wait until your current policy's term expires (or cancel it mid-contract).

Notify Your Mortgage Company

This is where an escrow account can make a difference in how you switch home insurance. While there are no fees connected with switching, you must give your mortgage provider sufficient notice to allow for payments to be rerouted.

Cancel Your Current Insurance Coverage

Once your new coverage is confirmed, you can safely cancel your existing insurance policy.

Consult your mortgage lender regarding any payment adjustments.

While you're likely to have sufficient funds in escrow to meet upfront payments, if not, your mortgage company may need you to make a slight adjustment to your monthly payments to make up the difference.

Changing homeowners insurance with or without an escrow account is quite comparable. The only distinction is how your mortgage lender is involved throughout the procedure. With an escrow account (or PMI), you can expect frequent communication with your lender.

Is there a cost associated with changing house insurance carriers when using an escrow account?

Changing your house insurance through escrow is free, as your lender only needs to alter the location of the monies they collect from you monthly. If you pay the entire coverage amount upfront but cancel your insurance before the expiration date, you will get a refund check for the time remaining on your policy. However, you may be charged a small cancellation fee if you cancel your previous insurance before it expires; you can check your declaration page to determine when your policy began (and when it is set to expire).

How do I obtain a refund from my previous insurance provider via escrow?

As previously stated, you should be reimbursed if you purchased a full year of home insurance and then canceled it mid-contract. This refund check will be issued to you directly, rather than to your mortgage company, allowing you to spend it in any way you like. Contact your mortgage provider if you're unsure how to utilize the funds effectively. They will inform you of your current escrow account status and whether you should commit additional monies to escrow.

Escrow accounts may appear complicated on the surface, but they are simply a means for you and your mortgage lender to have additional financial security. Contrary to popular belief, switching home insurance with an escrow account is straightforward.

You should be set for a stress-free mortgage as long as you've chosen an insurance company with an attentive customer service team, positive reviews, and cutting-edge technology.