When a person purchases a home with the help of a lender, many times, an escrow account is required to pay into homeowners insurance. The usual purpose behind paying into an escrow account is to make sure your premiums are paid and reduce the risk to the lender. After paying into this escrow account for a few years, many may not know that they can change insurance companies or may not know how to do it. How to change homeowners insurance with escrow is not a difficult process and can be accomplished by any homeowner.
With a little research and by following the steps in this article, you will be able to have the homeowner’s insurance coverage that you want and need. Let’s discuss the reasons you may wish to change homeowners insurance escrow and what the best procedure is to make it happen.
With a little research and by following the steps in this article, you will be able to have the homeowner’s insurance coverage that you want and need. Let’s discuss the reasons you may wish to change homeowners insurance escrow and what the best procedure is to make it happen.
Benefits of Changing Homeowners Insurance
Before we get into how to change homeowners insurance with escrow, let’s talk about the reasons you may want to change. There are several reasons why those who own homes may change insurance companies. The largest reason most people decide to change companies is for lower priced premiums. Premiums are known to creep up year after year until the homeowner realizes they are paying more than they should. The best advice is to have quotes completed for your home’s insurance at least every two years. This allows the insurance companies to compete for your business and give you the best price. By doing so, you can save hundreds or thousands of dollars over time.
Outside of saving money on premiums, another reason to change companies is to find one that is a better fit for you.
Outside of saving money on premiums, another reason to change companies is to find one that is a better fit for you.
How To Change Insurance Companies
There is no rigorous process you must follow to change homeowner insurance escrow. There are, however, steps you must take to make sure everyone involved is aware of the change.
The first step on how to change homeowners insurance with an escrow account is to have other insurance companies give you new quotes, as mentioned before. Once you have agreed to the terms of the new insurance company, you can then purchase the new and better policy. After this, the next step is to notify your lender that you have a new policy and that the escrow payments must go towards this new insurer. At this time, you can contact your old insurance company and cancel the previous policy. You may receive reimbursement from your last payment since insurance is paid 12 months in advance.
The first step on how to change homeowners insurance with an escrow account is to have other insurance companies give you new quotes, as mentioned before. Once you have agreed to the terms of the new insurance company, you can then purchase the new and better policy. After this, the next step is to notify your lender that you have a new policy and that the escrow payments must go towards this new insurer. At this time, you can contact your old insurance company and cancel the previous policy. You may receive reimbursement from your last payment since insurance is paid 12 months in advance.
Why Escrow Accounts Are Important
Most people lead busy lives. When it comes to paying bills, there are some you may get away with missing a payment. As an example, if you forget to pay your cable bill, you may be without something to watch on TV for a few hours. If, however, you do not have the money to pay for insurance for your home, you can find yourself in trouble.
The biggest problem with not paying insurance on time is it will be canceled. If this happens, you will be at risk of losing your home during a disaster and not having insurance to cover repairs or replacement. The second reason is since most lenders require you to have homeowners insurance, you could lose your home loan. Paying into an escrow account ensures you have the funds to purchase the policy each year.
The biggest problem with not paying insurance on time is it will be canceled. If this happens, you will be at risk of losing your home during a disaster and not having insurance to cover repairs or replacement. The second reason is since most lenders require you to have homeowners insurance, you could lose your home loan. Paying into an escrow account ensures you have the funds to purchase the policy each year.