Homeowners insurance is a big expense for many families. If you find a great rate elsewhere, can you switch policies if you use an escrow account?
If you are like many homeowners in the United States, you pay for your homeowners insurance using an escrow account. While this might seem like it makes changing the company or policy you have for homeowners insurance more challenging, in reality, that is not the case at all. When you’re ready to reap the benefits of a better, more affordable homeowners insurance policy, here is what you need to know about changing your insurance when you use an escrow account.
Get Together Your Insurance and Mortgage Documents
First, you should gather your current homeowners insurance, escrow, and mortgage documentation. Your current homeowners insurance policy information will let you accurately compare the policy you’re exploring with what you already have. You should carefully examine the policy to see if there is a cancellation fee related to terminating the policy before a certain date. Mortgage documents are essential for the insurance company setting up your new policy.
Get Quotes for More Affordable Rates
Once you know what you’re paying now, you can explore quotes from other insurance companies for similar policies. Homeowners insurance offers many benefits, including financial protection for the structure of your home if an accident occurs or your belongings if they are stolen or destroyed. Many insurance companies offer special perks and benefits that help you get the most out of your policy and have more peace of mind.
Confirm Your New Homeowners Insurance Policy
After you’ve chosen your new policy and accepted a quote, you should pay your insurance premium and ensure the start date for your new homeowners insurance policy is before or on the expiration date of your current policy. You can also notify your current insurer to cancel the policy or confirm the expiration date and that you will not be renewing. Some policies will offer a refund for the remaining term, which you could put towards your new insurance.
Tell Your Lender That Your Homeowners Insurance Has Changed
Next, you’ll need to let your lender know that you are changing your homeowners insurance policy. Your lender will note the start date for the new term to ensure that payments are sent to the proper company. Your new insurance company will take care of contacting the lender to send them the proper documentation, and the insurance company that you are leaving will also pass on the formal cancellation information.
Let Your Lender and New Insurance Company Resolve the Rest
After you connect your insurance company to your lender, you can leave the rest up to them. If your new homeowners insurance policy costs less, you will have extra money left in your escrow account. This might be delivered to you in the form of a check or be rolled over and applied to new premiums.
What Happens if Your New Policy Is Part of a Bundle?
One of the ways that many homeowners save on insurance premiums is by bundling multiple types of insurance with the same insurance company. By combining things like auto insurance and homeowners insurance, you can get even lower rates. If you have a new policy that is part of a bundle, rest assured that you will still be able to change the policy easily.
Calculate the cost of the homeowners insurance policy within the bundle price to get a good idea of the actual rate and ensure it’s less than what you are paying now. Use this amount when comparing quotes from different insurance companies. Once you’ve settled on an insurance company for your bundle, you can complete the steps above as normal and reap the rewards.