You open your mail or email and find a bill for your homeowners insurance renewal. There’s just one problem: your homeowners insurance is paid through your mortgage company.
So, why are you getting the bill?
If your homeowners insurance is escrowed through your mortgage payment, receiving an insurance bill can definitely be confusing. You may wonder whether something went wrong, whether you need to pay the bill yourself, or whether your mortgage company is already taking care of it.
The good news is that receiving a homeowners insurance renewal bill does not necessarily mean there is a problem. There are several reasons you might receive insurance documents even when your mortgage company is responsible for sending the payment.
Here’s what homeowners should know about escrow, insurance renewals, and what to do when an unexpected insurance bill shows up.
How Does Escrow Work With Homeowners Insurance?
When you have a mortgage, your monthly mortgage payment may include more than just the principal and interest on your home loan.
Many homeowners also pay a portion of their property taxes and homeowners insurance premium each month. That money is placed into an escrow account managed by the mortgage servicer.
Instead of paying your entire homeowners insurance premium directly to the insurance company when the policy renews, you contribute toward it throughout the year as part of your mortgage payment. When your homeowners insurance premium becomes due, the mortgage company generally sends the payment from your escrow account to the insurance company.
For example, if your homeowners insurance renews once a year, your mortgage company may receive the renewal invoice and send payment for the annual premium using the money that has accumulated in your escrow account.
That means you normally do not need to make a separate insurance payment yourself when the policy is properly set up to be paid through escrow.
Why Did the Insurance Company Send Me a Bill?
Even when your mortgage company is expected to pay your homeowners insurance, you may still receive a copy of the renewal bill or other policy documents.
Remember that you are still the policyholder. Your mortgage company has a financial interest in the property, but the homeowners insurance policy belongs to you.
Insurance companies may send policyholders copies of renewal documents, premium notices, declarations pages, or other important information regarding their coverage.
In some cases, the document you receive may simply be notifying you of the upcoming renewal premium rather than indicating that you personally need to make the payment.
However, you should still review anything you receive rather than automatically assuming your mortgage company has taken care of it.
Should I Pay the Homeowners Insurance Bill Myself?
If your homeowners insurance is normally paid through escrow, it is usually a good idea to verify the payment status before paying a renewal bill yourself.
Paying the bill immediately without checking could potentially result in both you and your mortgage company submitting payment.
Instead, contact your insurance agency or mortgage servicer and confirm whether the mortgage company has already sent the payment or whether payment is expected.
Your insurance agent may be able to see whether payment has been received and whether there are any issues with the mortgage company information listed on your policy.
If payment has not been received and the due date is approaching, your insurance agency and mortgage company can help determine what needs to happen next.
The most important thing is not to ignore the bill completely.
What If My Mortgage Company Hasn’t Paid Yet?
The timing of escrow payments does not always line up perfectly with when you receive your insurance renewal documents.
Your insurance company may send renewal information several weeks before the actual due date. Your mortgage company may not send payment immediately after receiving the bill.
If you receive a renewal notice and your policy is not due for several weeks, the mortgage company may simply still be processing the payment.
However, if the due date is getting close and your insurance company has not received payment, it is worth checking on it.
Contacting your insurance agency can be a good first step. Your agent can review the billing information available to them and help determine whether additional action may be needed.
You may also need to contact your mortgage servicer’s insurance or escrow department to confirm that they received the renewal information and that payment is scheduled.
What Happens When My Mortgage Company Changes?
Mortgage servicing transfers are another common reason homeowners insurance billing can become confusing.
Your original lender may not always be the company that services your mortgage for the entire life of the loan. Mortgages can be transferred from one servicing company to another.
When this happens, it is important that your homeowners insurance policy is updated with the correct mortgage company information.
The mortgage company listed on your insurance policy is often referred to as the mortgagee. Your insurance company uses this information to send necessary policy documents and billing information to the appropriate company.
If your mortgage is transferred but your insurance company still has the old mortgage company’s information, renewal documents or invoices may not reach the correct place.
If you receive a notice that your mortgage servicing company is changing, contact your insurance agency and provide the new mortgage company’s information as soon as possible.
Why Is My Mortgage Company Listed on My Insurance Policy Anyway?
Your mortgage company has a financial interest in your home because it provided the loan used to purchase the property.
Until your mortgage is paid off, both you and the lender have an interest in protecting the home from a major loss.
For this reason, mortgage lenders generally require homeowners to maintain adequate insurance coverage on the property. The mortgage company is typically listed on the homeowners insurance policy as a mortgagee.
This allows the lender to receive certain notices and documentation regarding the insurance coverage on the property.
Your lender may also have specific homeowners insurance requirements that must be met while you have the mortgage.
Could an Escrow Shortage Affect My Insurance Payment?
An escrow account is periodically reviewed by your mortgage servicer to make sure enough money is being collected to cover expenses such as homeowners insurance and property taxes.
Insurance premiums and property taxes can change over time. If those expenses increase, your mortgage company may determine that your escrow account has a shortage.
An escrow shortage can result in changes to your monthly mortgage payment because the servicer may need to collect additional money to cover future expenses.
However, questions about your escrow balance, escrow shortages, or changes to your monthly mortgage payment should generally be directed to your mortgage company. Your insurance agency can explain your insurance premium and policy, but the mortgage servicer manages your escrow account.
What Should I Do When I Receive an Insurance Bill?
If you receive a homeowners insurance bill and believe your mortgage company should be paying it, don’t panic—but don’t throw it away either.
Start by checking the policy number, renewal date, premium, and due date listed on the notice.
Then, contact your insurance agency to confirm whether your policy is set up for mortgage billing and whether payment has been received.
If necessary, contact your mortgage company to verify that they have the correct insurance information and that the payment is being processed.
It is especially important to follow up if you have recently refinanced your home, changed mortgage companies, or received notice that your loan servicing has been transferred.
Taking a few minutes to verify everything is set up correctly can help prevent a missed payment or interruption in coverage.
We’re Here to Help With Your Homeowners Insurance
Receiving an insurance bill when you thought your mortgage company handled the payment can be confusing, but it doesn’t always mean something is wrong.
Sometimes the notice is simply a copy of your renewal information. Other times, the mortgage company may still be processing the payment or updated mortgage information may be needed.
Either way, it is better to check than to assume.
Davis Insurance Agency, Inc. is an independent insurance agency based in Spring Hill, Tennessee, specializing in home and auto insurance and serving clients throughout Tennessee.
If you have questions about your homeowners insurance policy, renewal premium, mortgage billing, or coverage, give our office a call. We’re happy to review your policy and help you determine what your next step should be.