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Hazard Insurance

Posted: Wed Oct 10, 2018 5:27 pm
by raamakoti
This month I got letter from Escrow stating that I will be $1200 short by next year therefore either I can pay increased premium or pay the necessary extra upfront.
The line item shows $1197 for Hazard Ins.

I will call the bank and insurance to find out what it is? I have home owners insurances and umbrella policy as well. Do I need this or can I call them to take it off and be on my own. I live away from flood zone and nothing happens in North East Ohio anyways other than few snow blizzards per year.
I would appreciate your help.

Re: Hazard Insurance

Posted: Wed Oct 10, 2018 5:29 pm
by dm200
raamakoti wrote:
Wed Oct 10, 2018 5:27 pm
This month I got letter from Escrow stating that I will be $1200 short by next year therefore either I can pay increased premium or pay the necessary extra upfront.
The line item shows $1197 for Hazard Ins.

I will call the bank and insurance to find out what it is? I have home owners insurances and umbrella policy as well. Do I need this or can I call them to take it off and be on my own. I live away from flood zone and nothing happens in North East Ohio anyways other than few snow blizzards per year.
I would appreciate your help.
Yes - find out what it is. It will be up to the mortgage lender whether you can take care of this on your own or not.

Re: Hazard Insurance

Posted: Wed Oct 10, 2018 10:18 pm
by criticalmass
raamakoti wrote:
Wed Oct 10, 2018 5:27 pm
This month I got letter from Escrow stating that I will be $1200 short by next year therefore either I can pay increased premium or pay the necessary extra upfront.
The line item shows $1197 for Hazard Ins.

I will call the bank and insurance to find out what it is? I have home owners insurances and umbrella policy as well. Do I need this or can I call them to take it off and be on my own. I live away from flood zone and nothing happens in North East Ohio anyways other than few snow blizzards per year.
I would appreciate your help.
Why not get rid of the escrow for your insurance? Then it’s easier to shop around and switch insurance when needed. Also, you may get credit card rewards for payment (Amex currently has a 10% bonus available in Amex Deals too). As an added benefit, your monthly loan payment on your credit report will be lower too.

Yes, you still need insurance to protect you, and your lender wants to ensure your property is protected too, since they own an interest in the property. But shop around. If you stay with the same company too long, you may overpay.

Re: Hazard Insurance

Posted: Wed Oct 10, 2018 10:35 pm
by MissMolly
Hazard insurance is homeowners insurance. It's just the term used the in mortgage banking industry.

Re: Hazard Insurance

Posted: Thu Oct 11, 2018 5:42 am
by raamakoti
[/quote]
Why not get rid of the escrow for your insurance? Then it’s easier to shop around and switch insurance when needed. Also, you may get credit card rewards for payment (Amex currently has a 10% bonus available in Amex Deals too). As an added benefit, your monthly loan payment on your credit report will be lower too.
[/quote]

How can i get rid of Escrow? I am a first time home owner for last 13 months. Thanks for your help

Re: Hazard Insurance

Posted: Thu Oct 11, 2018 5:47 am
by nps
raamakoti wrote:
Thu Oct 11, 2018 5:42 am
How can i get rid of Escrow? I am a first time home owner for last 13 months. Thanks for your help
Just ask your mortgage servicer. Usually there is a loan balance to property value ratio requirement they will have established that determines if they'll let you pay these expenses directly without escrow.

Re: Hazard Insurance

Posted: Thu Oct 11, 2018 5:52 am
by prudent
Is $1197 what your homeowners insurance costs?

Re: Hazard Insurance

Posted: Thu Oct 11, 2018 7:54 am
by raamakoti
prudent wrote:
Thu Oct 11, 2018 5:52 am
Is $1197 what your homeowners insurance costs?
My home insurance is through liberty mutual and the premium is $1025

Re: Hazard Insurance

Posted: Thu Oct 11, 2018 8:01 am
by Rupert
raamakoti wrote:
Thu Oct 11, 2018 7:54 am
prudent wrote:
Thu Oct 11, 2018 5:52 am
Is $1197 what your homeowners insurance costs?
My home insurance is through liberty mutual and the premium is $1025
Was that last year's premium or next year's? My mortgage company always seems to get a copy of my new HO insurance statement before I do and sometimes pays it from escrow before I see the statement. The payment is always reflected as a "hazard insurance" disbursement from my escrow account.

Re: Hazard Insurance

Posted: Thu Oct 11, 2018 8:40 am
by raamakoti
Rupert wrote:
Thu Oct 11, 2018 8:01 am
raamakoti wrote:
Thu Oct 11, 2018 7:54 am
prudent wrote:
Thu Oct 11, 2018 5:52 am
Is $1197 what your homeowners insurance costs?
My home insurance is through liberty mutual and the premium is $1025
Was that last year's premium or next year's? My mortgage company always seems to get a copy of my new HO insurance statement before I do and sometimes pays it from escrow before I see the statement. The payment is always reflected as a "hazard insurance" disbursement from my escrow account.
What a mess the insurance company put me through. They billed me $853 first then $172.
After both were paid they issued another bill $1025 which the escrow declined. But now they are projecting my home insurance cost for next year is 1025+172 = 1197 additional cost instead of 1025 total cost.
Also found that they were not estimating my taxes correct so that will be additional $322 for 6 months :)

So good to know that it is not additional amount it is just communication mess up.

Re: Hazard Insurance

Posted: Thu Oct 11, 2018 9:24 am
by dm200
Our homeowners is under $500/year :)

Re: Hazard Insurance

Posted: Thu Oct 11, 2018 11:15 am
by megabad
raamakoti wrote:
Thu Oct 11, 2018 8:40 am
Rupert wrote:
Thu Oct 11, 2018 8:01 am
raamakoti wrote:
Thu Oct 11, 2018 7:54 am
prudent wrote:
Thu Oct 11, 2018 5:52 am
Is $1197 what your homeowners insurance costs?
My home insurance is through liberty mutual and the premium is $1025
Was that last year's premium or next year's? My mortgage company always seems to get a copy of my new HO insurance statement before I do and sometimes pays it from escrow before I see the statement. The payment is always reflected as a "hazard insurance" disbursement from my escrow account.
What a mess the insurance company put me through. They billed me $853 first then $172.
After both were paid they issued another bill $1025 which the escrow declined. But now they are projecting my home insurance cost for next year is 1025+172 = 1197 additional cost instead of 1025 total cost.
Also found that they were not estimating my taxes correct so that will be additional $322 for 6 months :)

So good to know that it is not additional amount it is just communication mess up.
I am glad you figured this out, but I would definitely keep documentation. It is a communication mess up that could end up costing you. Most bank policies are such that, if insurance lapses, they will buy it for you. I am not a fan of escrow of taxes and insurance for this reason and many others. I find that I am a much more reliable payer of taxes and insurance bills than most banks. Changes in insurance and uneven billing dates commonly cause multiple bills like this. And ultimately with escrow you are responsible for any errors that the bank makes.

Re: Hazard Insurance

Posted: Thu Oct 11, 2018 11:25 am
by dm200
We are very fortunate that our mortgage lender (Navy Federal Credit Union) does not require that we escrow taxes and insurance. :)