Why Is My Mortgage Company Charging Me for Hazard Insurance and What Can I Do?

You're getting charged for hazard insurance and wondering why your mortgage company is adding it to your bill. This is because your lender requires it as a condition of the loan.

Hazard insurance, also known as homeowner's insurance, protects your lender's interest in the property in case of damage or loss. It's a standard requirement for most mortgages.

Your lender is essentially requiring you to purchase insurance that covers the property, not your personal belongings, to ensure they can recoup their investment if something goes wrong.

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Homeowner's insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary.

Your lender requires proof that you have homeowner's insurance because they want to make sure your property is protected.

Standard homeowner's insurance doesn't cover damage from earthquakes or floods, but you may be able to add this coverage.

Homeowner's insurance is also sometimes referred to as "hazard insurance", which is why you might see it listed on your mortgage documents.

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Many homeowners pay for their homeowner's insurance through an escrow account as part of their monthly mortgage payment.

The lender holds the part of the payment that is for insurance in an escrow account and pays it when the bill is due.

Homeowner's insurance protects your property, but it's not the same as mortgage insurance.

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Your mortgage company may be charging you for hazard insurance because lenders generally require proof that you have homeowner's insurance. This is because homeowner's insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary.

Lenders want to ensure your property is protected by insurance, which is why they may add the insurance charge to your monthly mortgage payment. Many homeowners pay for their homeowner's insurance through an escrow account as part of their monthly mortgage payment.

You may be paying double for insurance if your mortgage company has billed you for homeowners insurance despite already having it. Paying double can result in a higher mortgage payment, like Lillie Mae's $75 monthly increase.

Homeowner's insurance is not the same as mortgage insurance, and you should verify that you're not paying for duplicate coverage. You can try sending your proof of insurance to your mortgage company to resolve the issue.

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You can avoid paying double for homeowners insurance by taking proactive steps. Contact your insurance company as soon as possible to buy a new policy or reinstate an expired one.

Make sure your insurance company sends proof of insurance to your mortgage company, listing them as the "Mortgagee". This will cancel the force-placed insurance policy.

If you disagree with an action your mortgage servicer took with your insurance, send a notice of error stating your disagreement and proof of documentation.

You can request a refund for the money you paid erroneously if your mortgage company removes the homeowner's insurance charge from your monthly payment.

If your insurance coverage was cancelled due to your mortgage servicer's failure to make timely insurance premium payments, consult an attorney for assistance.

Here are some tips to prevent costly force-placed hazard insurance: