Changing Home Insurance Carriers with an Escrow Account

If you have an escrow account, making changes to your home insurance is extremely quick and easy.

You can switch your home insurance at any time, even mid-policy. Many people don't realize that they can cancel their home insurance policy at any time for any reason. About 90% of insurance companies do not charge any cancellation fees. You can switch your home insurance even mid-policy period and start seeing the savings instantly!

There are a few quick steps you need to follow when switching your home insurance with a mortgage escrow account.

Start the new policy before canceling the old policy. Start your new policy with an effective date (start date), a week or so in the future, to give yourself plenty of time to cancel your current policy. Since your policy is in escrow, you can switch companies with no money out of pocket!
Call your current insurance company to cancel your policy. Only you as the insured can legally cancel your policy. Your new agent can't do this for you. Because your mortgage company always pays in-full for your insurance, after canceling you will receive a pro-rated refund check in the mail for the amount of premium that you have paid for (through your mortgage), that the insurance company did not cover you for. If you started the now canceled policy just 2 months ago, this refund check could be quite large!
Make sure your escrow has enough money to pay the new company. If you are switching home insurance companies just a few months after you started your current policy, chances are your escrow account will not have enough money in it to pay the new policy. If this is the case, you need to send at least a portion of your refund check back to your mortgage escrow account to ensure your new home insurance policy gets paid. If you are canceling your current policy after 10 or 11 months of coverage, you probably won't have to send any portion of your refund check back to the escrow.

Last modified: Wed Sep 1 23:12:51 MDT 2010