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Does escrow pay for home insurance?
I’m buying my first home, and my mortgage lender is requiring me to purchase home insurance. I know I have an escrow account, but I’m not sure what it pays for. Will my escrow pay for home insurance?
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Congratulations on the purchase of your first home! Most mortgage lenders require home insurance and use escrows to pay for home insurance.
An escrow is an account set up by your lender to ensure your
home insurance
and property taxes are paid on time. When you close on your home, your down payment will include money for your insurance, taxes, and any additional fees for the year. After the initial first payment, your lender maintains your escrow account by adding funds to it every month from your mortgage payments. In some instances, your lender may recognize a shortage due to increased costs and may request you either deposit an additional amount for the year or add a specific dollar amount to the rest of your mortgage payments.
Since paying for home insurance with escrows is common, there isn’t much you’ll need to do. Once you select your required coverage, you’ll provide your insurance company with your lender’s address. Your lender will then pay your homeowners insurance bill every year.
That said, it’s still important that you shop around and find the best insurance policy for your new home. If you haven’t chosen a company yet, use
Jerry
to explore your options. Jerry can provide you with competitive quotes in under a minute. Swapping is just as effortless. Jerry takes care of all the paperwork and phone calls, so you don’t have to. View full answer
- Gregory R.
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