Changed Homeowners Insurance??? Something to consider...

**McD** · 03-03-2010, 02:19 PM

Hubby and I recently switched our insurance provider due to a lack of service (calls not being returned, forms not being sent out, all of which were costing us money due to actions on policies being delayed, etc). As a result, the insurance on our house decreased by 275$ for BETTER coverage, BETTER service.

I never have to think about paying the bill because it is set up through our escrow account. Today I had an ah-ha moment and called my mortgage company and asked them what they would be doing with the 275$ difference. They are reanalyzing my escrow payment as we had a shortage due to property taxes increasing a bit and depending on the dollar amounts, they will either issue a refund check to us or they will adjust our mortgage payment amount after calculating that 275$ into the escrow account. If that's the case we'll still be paying the same dollar amounts on our mortgage, but have more going to principal.

So moral to this story: if you change insurance companies, check to see what effects it will have on your escrow!!!

**Russ** · 03-03-2010, 03:19 PM

Good reminder Nichole, BUT....

Why wouldn't you take that $275 and add it to your snowball?

**McD** · 03-03-2010, 03:25 PM

If they cut us a refund check, we will do that.

But there are a lot of factors in play that will affect whether or not we get a check refunded to us or not. Our escrow account is assessed every September. In Sept 09, due to rising property taxes and (at the time) rising insurance prememiums, the amount we had to pay into escrow increased, thus increasing our mortgage payment.

So they are reanalyzing the escrow amount we will need to pay in. They may take a portion of the 275$ and apply it to the remaining escrow shortage and lower our payment amount. If they do that, and the remaining balance is lower than a certain threshold, they won't cut a check, it just gets applied to the mortgage payment. I get that and I'm fine with it.

But I'm kinda hoping for a check. I wanna make an extra payment on something.

**Greebo** · 03-03-2010, 03:26 PM

Originally Posted by Russ

Good reminder Nichole, BUT....

Why wouldn't you take that $275 and add it to your snowball?

She's violating the DR principles! GET HER!!!!

**ncarr** · 03-04-2010, 10:25 AM

I'm glad you were able to save some money! We are looking into changing our homeowner's insurance as well. it's really expensive especially for a 1 br condo.

**itlw8** · 03-04-2010, 02:06 PM

thanks for the reminder

We need to evaluate all our ins... had a speaker about childcare ins I liked what they said so while I am switching that I need to lookin into all our ins and check into an umbrella policy to protect our accets. not that we have much but if we lost our house and retireement account we would eat dog food when we retire.... YUCK

**Vanilla** · 03-04-2010, 02:20 PM

When I reviewed my old policy, I found out that I was way under insured. I've just changed the homeowners ins company to the same one as the auto's, increased the replacement & liability coverages, increase the deductible amount, the total is less than what I had. I am also thinking about the umbrella coverage, but that will be an extra $400 yearly, maybe add that in next month.

**frugalfriend** · 03-05-2010, 10:57 AM

Have you paid enough on your mortgage that you no longer need an escrow/impound account? That way you could have the control over paying your own insurance and taxes and put the savings where YOU want it.

**McD** · 03-05-2010, 01:28 PM

Originally Posted by frugalfriend

Have you paid enough on your mortgage that you no longer need an escrow/impound account? That way you could have the control over paying your own insurance and taxes and put the savings where YOU want it.

We don't have that option. It's kind of a good thing because I don't know that I would maintain the discipline of sticking that money aside, kwim?

**Greebo** · 03-05-2010, 02:47 PM

Originally Posted by MrsMcDowell

We don't have that option. It's kind of a good thing because I don't know that I would maintain the discipline of sticking that money aside, kwim?

It's not hard. You set up a separate bank account and have your direct deposit put the needed monthly amount into it for you.

When our primary mortgage was with our credit union, we kept a savings account with the CU and put $136/pay into it. When taxes and insurance came due, those were the only things set up to be paid from that account.