Simple answer here: YES. Your insurance agent or company is not always notified by the lender that the mortgage is paid off. And NOT knowing could cause some problems with your Ohio homeowners insurance. Here’s the main reasons you need to let us know when your mortgage is paid off.
You’re currently set up for an escrow account and your bill is sent to the lender for payment
Let’s face it, if you’ve had an escrow account for many years, the bill is paid like clockwork. You probably don’t even think about it much. But, when your mortgage is paid off, the lender no longer has any reason or obligation to continue doing this. Remember, the property taxes and insurance were part of your monthly payment and you no longer have a monthly payment (yay!)
So when the bill is sent to the mortgage company for payment, the worst case scenario is they ignore it. And then the policy cancels for non-payment. Obviously, you DON’T want this to happen.
So if you’ve paid off your mortgage and receive a notice of cancellation from the insurance company (that’s usually the trigger for many), call your agent so the mortgagee can be removed AND you can tell us what billing plan you want (EFT or direct bill and what payment frequency). The lender paid it for you when you had the escrow account. Now that the escrow longer exists, it’s up to you to pay the bill.
Simplest solution: just call us when you pay it off and we’ll take care of it then.
Want more information about mortgage escrow accounts? Check out these articles.....
You have a homeowners claim
If you have a mortgage on your house, claim checks are made payable to you as the insured and the lender, as they have a financial interest in the home.
So unless we know there is no mortgagee, all claim checks will be issued with both names. This adds another headache to an already stressful situation and slows down the claims process, as we need to 1) submit a change request to remove the mortgage; 2) then have the claims department void the issued check(s) and; 3) issue a new one with just your name.
If the claim is serious enough, this delay could cause even more problems, especially if there are vendors/contractors waiting to be paid for their work. For additional tips/guidance for a homeowners claim, read our blog post "How do Ohio homeowners insurance claims work?"
So just let us know when the mortgage is paid off and we’ll remove the mortgagee. Any future claims checks can be issued correctly and the process won’t be delayed. As an added tip- if you have a statement booklet, write on the last page “Call Alan Galvez Insurance” as a quick reminder.
And congratulations on reaching this significant milestone- time to celebrate!
Questions on your Ohio homeowners insurance or need a quote? Call us at (937) 592-4871 or visit www.galvezinsurance.com. We’re here to help.