Intentional Success - Homeowners Insurance Escrow

The expectation is that any insurance term can be easily understood if someone who works around this stuff explains it simply. I believe that is true in almost all situations in personal lines. The outlier is Homeowners Insurance Escrow.

Homeowners escrow starts out innocent enough: Lenders want to be certain that their assets are being properly insured. When one buys a home, they pay the first year of your homeowners insurance up front. Then, each month 1/12th of your home insurance cost is bundled into your mortgage payment which is paid though your escrow account.

Escrow Account – Mortgage principal + Mortgage interest + Property Taxes + Homeowners Insurance

What if sometime between when you bought your home and you sell your home, you found a better insurance solution than what you started with, and you want to switch?

Let’s use round numbers. Your homeowners coverage is $1,200 a year, meaning $100 a month goes toward your homeowners insurance from your escrow account. If you are 3 months into your policy, and you decide to switch brokers, you will have $900 of unused premiums. Your old carrier will send you a check for that money (usually within 3 weeks), while the new broker will collect a year’s upfront payment for the new, better policy you just bought.

The $900 refund you received will be yours to use as you will, since you will have paid for a year of homeowners insurance up front. Most folks use that refund to recharge their bank account after making the annual homeowners insurance payment.

When it’s all said and done, you are getting better coverage, a better price, or both. The rub is having to shift money around for a few weeks.

If most of this made sense, you now understand one of the more intricate pieces of personal insurance. If you’re still fuzzy on the details, please call me at 920.629.0468 to iron out specifics.

We encourage you to insure differently. We are driven to serve.

Elevated Insurance is located at N19 W24400 Riverwood Drive, Suite 350, Waukesha, Wis. 53188. For more information on Elevated Insurance and owner Jackson Bubolz, please call or text 262-424-0420 or email Jackson@elevatedins.com. www.elevatedins.com