Can I change insurance? Lender already paid from escrow

6 Replies


I am looking to switch my insurance company to save on insurance premium ,unfortunately the lender already paid in full for the entire year already. Can I still make the switch with a full refund from the previous company? Current insurance expires in 12 days


Possibly. By them making the payment they have "bound" the coverage. You may or may not be able to cancel. There may also be a penalty for canceling early. Call the insurance company and ask.

I switched my insurance company for my rental properties a couple of months ago. The current insurance company will need to refund the prorated amount and the new insurance company will contact the mortgage company to make the update. Just a heads up, it was a bit of a hassle for the first months but now everything’s worked out. 

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Your new insurance company needs the loan number and loss payee information rom lender. Your lender has requirements as to the dollar amounts of coverage. If you are underinsuring per the appraised replacement value they will slam you with forced place insurance at 3X the costs. The loan may have sold so make sure you have correct servicer.

Existing policy can be cancelled generally you are not getting 100% back refund. Ask the existing agent, and while you are at it see if they can match the quote.

Yes. Insurance is prorated (generally) to the day.  Doesn't matter if you paid a year in advance, when you cancel on X day with old company they should refund you from X day to the end of the policy and your new company will take over from X day.  

@Peter Morgan we do it on a daily basis for new clients.  Keep in mind you will most likely not get the refund form the old company for 45-90 days, so you will need to pay that out of your own pocket for now. 

Your agent needs to file some extra paperwork, but very easy to do.  They should be able to walk you through the process.  


If this is for a closing you want to make sure that this close to date it doesn't push your date.

If for a renewal than it shouldn't be an issue.  yes, you will get refund.  if you are in an admitted market, meaning insurance company under state jurisdiction, then the refund would be pro-rated.  if in a non-admitted market/excess then there could be a penalty.

However if as you said it is for the renewal date you can ask about a flat cancel on renewal and the full amount your escrow paid should be refunded.  Depending on the carrier some will want  you to make a down payment to bind and others will allow you to bill your escrow. 

Assuming the mortgage paid it already if you are going to cancel the old insurance make sure to call the mortgage and tell them you will be canceling and give them new insurance info so they know:

1-to expect refund from old company

2-to pay new bill from new company

Hope that helps.