Check out our blog post here: Changing Home Insurance with an Escrow AccountStreetsmart Insurancehttps://www.streetsmart.insurance › changing-home-insur…
Here are the steps to follow when switching home insurance providers:
- Confirm Mortgagee Clause: Make sure that the mortgagee clause on your new policy is correct. The mortgagee clause includes your lender’s official name and the address where all policy documents will be sent. Ensure that the clause is not just your lender’s name and the address where you send your monthly payments, but also includes the unique address for insurance documents.
- Purchase your new policy: Once you have confirmed that the mortgagee clause on your new policy is correct, you can proceed to purchase the new policy. Since you will be paying for the insurance through escrow, you will not need to make any out-of-pocket payments. The new insurance company will send the bill to your mortgage institution.
- Cancel your prior policy: Contact your current home insurance carrier to cancel your prior policy as of the same date your new policy becomes effective. This will ensure that there is no gap or overlap in your coverage. Even if your new policy will not take effect immediately, it is still safer to start the new policy before canceling the old one to avoid any issues.
- Notify your mortgage company: While your mortgage company should receive a cancellation notice from the prior insurer and a declaration page from the new insurer, it is always a good idea to let them know that you have switched insurance providers. Provide the cancellation date of the prior policy, the effective date of the new policy (which should be the same to avoid a lapse), the name of the new company, and the policy number.
- Send any premium refunds to your new escrow account: If you switch companies midterm, you may receive a pro-rated premium refund from your prior policy. Contact your mortgage company to find out how to send this refund to your escrow account. Keeping the refund could mean that your escrow will have a shortage, and you’ll have to pay higher monthly mortgage payments to rebuild your escrow amount.