Can I Switch my Home Insurance midterm when it’s paid by escrow

Midterm Switch

One of the most misunderstood facts about your personal insurance, meaning your automobile and homeowner’s insurance specifically, is that you need to wait until your renewal to switch insurance carriers. This is not the case at least 99% of the time. Your automobile and homeowner’s insurance may be canceled and moved to another insurance company at anytime and it will be canceled on a prorated basis.

We go a little more in detail on that specifically here.

But what happens when your homeowner’s insurance was already paid by your escrow account?

Prorated Cancellation

A prorated cancellation means that the insurance carrier will not penalize you or charge you a fee to stop your insurance. This means a refund will be generated back to you for all the unearned insurance premium. No matter who pays the premium for this insurance, the refund will be generated back to the policy holder/named insured.

This is key when determining the best solution for handling a midterm insurance switch on your homeowner’s insurance.


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There are two different ways to make switching your homeowner’s insurance midterm easy when it is handled by your escrow account.

When a new insurance policy is issued, it is going to bill your escrow account. Your escrow account is going to do one of two things.

A. Pay the new insurance premium

B. Or they won’t

Whether or not they will pay the new premium usually will determine on a few factors

When was the last time they paid your insurance premium?

Is there money currently in your escrow account and if so how much?

What guidelines does your mortgage company follow? Some may have a guideline that they will only pay once a year, no matter what.

If your mortgage company pays the new premium that is great, what that usually means is that you will have a small shortage in your escrow account which can be filled when the old insurance company sends you back the prorated refund. This can be submitted back to the mortgage company either at your next monthly mortgage payment or when the escrow account does its year end calculations.

If the escrow account refuses to pay the new insurance premium, you will be notified directly by them and you will then be able to use the prorated refund from the old carrier, to pay or help pay for the new insurance policy. This will only be required for the first year and all remaining years will still be sent to your escrow account.

The important thing to realize is that no matter what, you aren’t losing any money in the long run. It’s just important to know which way the money needs to be shuffled around so that all parties are on the same page.

Using an independent insurance agent to help walk you through this process is very important.

What’s Next?

Make sure you are using an independent insurance agent who can provide options for you. Don’t know an agent or want a review of your insurance?

Click below to learn more on how to proceed.



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