If you have owned your home for a while, you may wonder if your homeowners insurance is still a good deal. But then you remember that your insurance premiums are paid through an escrow account. You are probably a little panicked as you realize you are not entirely sure what escrow even means, never mind what happens to it if you change insurers.

But changing homeowners insurance, even when it’s paid through escrow, is pretty painless. Just follow the steps below.


When you buy a home by securing a mortgage, your lender usually opens an escrow account to hold payments for fees associated with the property, such as property taxes and homeowners insurance. You make those payments to the account along with your monthly mortgage payment. When the insurance and property tax bills come due, they are disbursed from the escrow account.

The funds that go into your escrow account are paid as a part of your monthly mortgage payment. Your bill will very clearly state how much of your payment is going toward paying off the house, and how much is going into your escrow account.

Every year, your lender will conduct an escrow review and adjust your escrow payment based on your insurance and property tax rate changes. So if your property taxes and home insurance are set to increase, your escrow payments would increase each month in an even distribution throughout the year.

Your lender will then send you an escrow review statement that explains how much your insurance went up and how much your property tax went up. Switching policy companies when you are paying insurance through an escrow account is not any harder than if you were paying for insurance directly, but there are more variables you need to consider.



The Real Estate Settlement Procedures Act, or RESPA, is a set of federal laws that protect consumers who are purchasing real estate. RESPA gives you the right to choose your own homeowners insurance provider. That said, your coverage will still need to comply with any requirements set by your lender, such as certain types of coverage or the minimum amount of coverage. If your insurance premium is paid from your escrow account, you are still free to look for a better rate on your homeowners insurance. You will just need to notify your lender when you decide on a new provider.



Be sure to thoroughly read through your existing homeowner’s policy to ensure that you will not incur fees or penalties for canceling your policy before the term expires. If you are unsure about your policy’s effective dates, your insurer can fill you in.

If you’d rather wait until your policy expires rather than switch mid-term, let your lender know 30 to 60 days in advance so they do not make your policy renewal payment through your escrow.



If you decide to change your homeowner’s insurance policy and that policy is paid from an escrow account, you will need to notify your lender. Call your lender and let them know you intend to change providers. Most likely, you will need to cancel your existing insurance policy yourself. You can do this by contacting the current company.



When you change your homeowner’s insurance provider in escrow, your premium should still be paid from your escrow account. This may not be possible if the account does not have enough funds to cover the entire premium. Lenders usually pay insurance premiums once a year, so if your existing policy was paid recently, you may not have the accrued funds to cover your new policy. You can cover your policy out of pocket and your lender will later reimburse you with a check from the escrow account funds.



You can change your homeowners insurance provider whenever you choose, even mid-policy. If you cancel your current policy before it expires and are due a refund, the insurance company will send a check directly to you. You can opt to put this money back in your escrow account, but you’re not required to. If you had to cover the new premium out of pocket, you may wish to keep the funds as a repayment; however, if your escrow account is covering the new premium, it might be a good idea to reimburse the account so you’re sure it has sufficient funds when the new policy premium comes due.



When choosing an escrow company there can be many important factors to evaluate. Fees, location, staff and even recommendations from friends and colleagues are all things to consider. With Citrus Heritage Escrow by your side, you can rest assured that when you receive your settlement check, you have gained the maximum benefit from your home sale or purchase.

Call us today with any questions or concerns. Our professional Escrow Agents will help you through this exciting yet confusing process. (951) 335-7200