How to Switch Home Insurance That's Paid Through Escrow
Homeowners have the option to pay their home insurance premiums directly to their insurer once per year, but many choose to split the premiums up into monthly payments that are added to their monthly escrow payment. If you pay your home insurance premiums via escrow, here's how to switch policies and make sure your home remains properly covered.
Find Another Home Insurance Policy
The initial step to switching is, of course, to find another home insurance policy. The easiest way to do this is with the help of an insurance agent who knows how to compare policies' coverages and options. You'll also want a copy of your current home insurance policy on hand.
Review your current policy's declarations page, which is the page that details the policy's protections, with your insurance agent. Determine whether the current protections still meet your needs or if changes are necessary, and decide what protections you want your next home insurance policy to provide.
Once you have identified the protections you want in your next policy, your agent can request quotes for policies that meet your criteria. With coverage needs addressed, you can focus on price as you compare the available options.
Importantly, you can choose from almost any available home insurance policy. Your mortgage likely comes with minimum coverage requirements for your house itself, as many lenders include these requirements to protect their investment. So long as a policy meets and such requirement, though, you can select it and pay it through escrow.
Give Your Lender the Details
After you have chosen a specific home insurance policy, you'll have to notify your lender of the insurance change.
The lender may want to see paperwork that shows your new policy meets any applicable minimum coverage requirements. Your insurance agent can help you identify what documentation is needed and get those papers if you have to prove what coverage you have.
Additionally, your lender will need some basic details regarding your new insurers. Expect to send them the insurer's name, phone number, and address, and they might ask if you know the company's fax number. The insurer will also want your account number so that they can confirm your policy is as you describe and in good standing.
Notify Your Escrow Company of the Change
Along with telling your mortgage lender about the change, you also need to notify the escrow company that holds your home insurance premium and property taxes. You need to tell your escrow company of the insurance change so that they pay the right policy's premiums.
Should you fail to contact your escrow provider, you could end up paying premiums on two home insurance policies. Because this is your mistake, your escrow provider may simply make two premium payments, one for your old insurance policy and one for your new policy, from your account. The added cost is simply passed on to you in the form of higher monthly payments.
Double-Check Both Policies
At this point, everything is theoretically in place, and you shouldn't have any trouble switching insurance policies. Going over the policies one more time, however, is wise, as it'll ensure there are no mistakes that could compromise protection.
First, check your new policy to make sure it truly does offer all of the protections you need. It will have the options you chose when setting up the policy, but you might have thought of other coverage needs throughout this process. If you did, have your agent make the necessary adjustments.
Second, confirm that the policies' dates line up perfectly. The new policy should begin offering coverage exactly when the old one stops so there's no gap in protection.
For help switching home insurance policies, contact Coastcomp Insurance Agency.
