For most of us, our house is our biggest and most valuable asset. It’s our shelter – our place to be safe and to call home. And for that reason, we want to keep it protected when disaster strikes. Homeowners insurance is a necessary way for us to keep our homes safe from the unpredictable.
A few things might cause you to change your homeowners insurance company.
First, you might switch homeowners insurance companies to save money. Shopping around for better policies is an important part of the process, and you should look for the best possible option.
The other common reason is that you want to increase or reduce your coverage in a way that cannot be done by your current homeowners insurance company. So, you begin the search for a company that can better meet your custom insurance needs.
Making the Switch
Whatever your reason is for switching, you’ll want to make this transition in the right way. Let’s take a moment, from the perspective of a Quicken Loans client, to go through the steps of changing your insurance carrier.
Step 1: Break Up with Your Carrier
If you decide to change insurance companies, you must let your old insurance carrier know that your policy needs to be cancelled. Don’t belabor this one – just rip it off like a bandage. Call your current insurer and break the bad news.
Step 2: Refund the Refund
If your old policy hasn’t ended when you cancel, you may receive a refund check from your now-previous carrier. Before you run to the mall and splurge on your wish list, take a few deep breaths and send that fully endorsed check to Quicken Loans.
Whoa, whoa, whoa! But that’s your refund! At a first glance, this can seem confusing. Let’s take a second to break down what’s really happening with this refund and how Quicken Loans is involved in the process.
When you get a mortgage with Quicken Loans, most clients have something called an escrow account. This is a savings account that’s set up by your mortgage lender. Quicken Loans, as a service to you, will pay your yearly homeowners insurance policy upfront. You’ll pay it back on a monthly basis as part of your regular mortgage payment. This way, your payments are more manageable.
But what does this have to do with your refund? Let’s say your yearly policy costs $1200. Quicken Loans pays that upfront, and you’ll pay in monthly increments of $100 as part of your escrow account. After three months (during which you paid $300 for homeowners insurance), you decide to change insurance companies, meaning you receive a refund from your previous carrier. Since you’ve only had the policy for three months, you will receive a refund for nine months of insurance payments ($900).
Step 3: Beware the Escrow Shortage
If you change homeowners insurance companies, Quicken Loans will again pay for your policy upfront. But if you didn’t send Quicken Loans the refunded check from your previous policy, you’ll need to pay for both the old policy and the new policy as part of your monthly mortgage payment.
This, in turn, could cause something called an escrow shortage, which basically means you don’t have enough money in your escrow account to pay for all of your insurance. This causes your monthly mortgage payment to increase the next time your annual escrow analysis is performed.
This is why sending your fully endorsed refund check to Quicken Loans, is usually easier. If you prefer, you can send a personal check for the amount of the refund you received instead.
Where Do I Send My Refund?
Once you’ve received your refund, you should send it to the following address:
Quicken Loans Inc. ISAOA
PO Box 202070
Florence, SC 29502
By doing this, you’ll be taking full advantage of your new policy and keeping your escrow account in check.
If you have questions about this policy or refund, or you’d like more information, feel free to reach out to Quicken Loans at (855) 282-8722, Monday – Friday, 7:00 a.m. – 8:00 p.m. ET. Looking for a new mortgage? Contact a Home Loan Expert today!
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