<p>Wells Fargo pretty much insists on paying the insurance out of escrow if you still owe quite a bit on the mortgage. They are named as the insured so that they get their money back if the house is destroyed. Makes sense to me.</p>
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It’s fairly common for home insurance to go through the mortgage, particularly when the mortgage is a large portion of the home value. However, you should be able to choose what type of home insurance conditions you want (so long as it meets min basic coverage), and you should be fully aware of the policy conditions. If this isn’t being done, I’d suggest contacting the parties and working out a solution.</p>
<p>I had a home insurance claim a few weeks ago. A portion of the water from a load of laundry emptied out on the floor instead of through the washing machine’s drainage pipe. The water damaged both the laundry room and the theater below the laundry. It ended up being a major drying/restoration event that took weeks to complete. The total bill was originally ~$27k, then negotiated down to ~$23k – ~$4k for drying, ~$9k for restoration, and ~$10k for replacement cost of some theater tech. When I originally purchased the insurance, I didn’t think much of things like replace cost vs replacement value, but the difference between the two came to over $6k is this claim, so I’m glad I had replacement cost, leading to the full bill being covered (minus deductible). You should be aware of the details of your insurance contract and know your coverage and costs for various claim events.</p>
<p>Interesting thread re mortgages and escrows. I have worked in mortgage lending off and on for 20+ years and ALWAYS recommend people try to avoid escrows - as clerical workers screw them up constantly. But as thumper experienced - even if you don’t escrow - the lender requires proof of insurance coverage with them listed as the mortgagee. If you don’t provide - they can legally " force place" insurance of their choosing - which will be exorbitant. I personally provide the proof of insurance coverage to my lender annually - I don’t trust the insurer and mortgage lender to communicate between themselves - I take care of it.</p>
<p>OP - did you complain to the head of loan servicing at your mortgage lender? Complain in writing and mention the Consumer Financial Protection Bureau - that you will contact them and file a complaint. The CFPB has teeth! <a href=“http://www.consumerfinance.gov/”>http://www.consumerfinance.gov/</a></p>
<p>Just for the record, the mortgage company in this case is Chase . . . so calling them idiots really does a terrible disservice to true idiots everywhere.</p>
<p>Want to add that I always advise borrowers who have escrows to know when their property taxes and insurance premiums are due and to monitor their payment. It’s not enough to see the disbursements from the mortgage escrow account - check the taxing authority website to verify the bill is paid in full and check directly with the insurer as well. I had a borrower last year whose lender paid the taxes - he could see the funds going out of his escrow account - but they paid the taxes for 123 Main Street instead of 123 Main Avenue and he had no idea that his escrow funds had paid someone else’s taxes until he rcvd a tax auction notice from his county! I am working with someone right now whose lender has been paying the taxes on her home - at the 2010 amount! She now owes $5000+ in delinquent taxes, penalties and interest.</p>
<p>Bottom line - try to avoid escrows. And if you have escrows - don’t assume the lender knows what they are doing. Supervise and verify that they are paying the correct amounts - on time - to the correct entity - and reflecting the correct property address.</p>
<p>Just received clarification my my insurance agent. According to her , all I have to do is contact their office - annually! - and request that my deductible not be increased. And the logic in this, if any, continues to elude me. For the insured’s own protection, should he or she not be required to opt in to any change in coverage, rather than being required to opt out?</p>
<p>And why, or why, would the insurer do all of this just to get less of my money? Is it not in the insurer’s best interest to get every last penny they can? So why even offer the “discounted” rate???</p>
<p>Does sound very odd. This would prompt me to shop for new insurance.</p>
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Indeed . . . had I not just switched carriers (and consolidated all my policies) last year!</p>
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<p>We DID get a copy of our declaration well in advance of the mortgage company telling us they didn’t get one! The insurance company sent the mortgage company the new declaration the same day they sent ours. </p>
<p>I’m with dodgersmom…these folks March to their own drummer…and it is annoying.</p>
<p>FWIW, when I switched carriers last year, I informed Chase of the change and directed their insurance department not to pay the bill they’d already received from the old carrier. They confirmed that they would not pay it. I checked back with them two more times, just to make sure the old carrier was not being paid. Again, both times, I was assured that the carrier was not being paid.</p>
<p>As it turned out, the old carrier had, in fact, been paid before I ever spoke to Chase. So, I as told THREE times that payment would not be sent, when it had already been sent!</p>
<p>So I have good reason to be confident that ANY instructions I give to Chase regarding the payment of homeowners’ insurance will be noted diligently . . . and thereafter completely disregarded.</p>
<p>My mortgage holder happens to be the bank where I do most of my business. As I said, our mortgage is less than 5% of the value of this house. My insurance is for 1 1/2 times the replacement value. </p>
<p>It would be one thing if the bank made this error ONE time, but it has happened FOUR consecutive years. </p>
<p>This thread confirms my hatred of escrow accounts. I have seen so many clients over the years with all sorts of problems with them. Taxes not paid, exorbitant home insurance costs, insurance not paid, excess escrows not refunded. I never trust a low-level clerical employee to think analytically or care about something that affects me much more than them.</p>
<p>Ours took the PMI off a year early. I liked that mistake! </p>
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<p>Probably because small claims cost a lot in overhead compared to the amount of money paid on the claims. An insurance company may prefer customers with higher deductibles only making claims for large things, rather than making a $400 claim on a policy with a $250 deductible.</p>
<p>You can change the policy at any time … so you can decrease the deductible now, if you want. Of course, you have to make sure the change actually gets made! I would suggest just paying the difference in premium yourself. Or switch carriers now, since you don’t have to wait until the policy expires to do so.</p>