As premium rates rise, Evansville and Southern Indiana residents are looking for ways to save money. One way you can possibly squeeze a few more dollars out of your budget, is to pay your homeowners insurance policy in full. Although, not strictly limited to homeowners insurance, auto policies also benefit from paying the term in full.
Yes, you should always pay your homeowners insurance in full.
I realize not everyone has the financial fortitutde to pay a full term of insurance in one go. However, below are the benefits and long term savings you are potentially missing out on by using Escrow or paying monthly.
Paying your homeowners insurance policy in full shows the carrier that you are financially responsible. Homeowners that show this type of planning are typically a lower risk. This type of customer, paying their bills in full and in advance are generally less likely to make friviulous claims. This ‘flag’ or signal to insurance carriers is then rewarded with lower premium rates.
But what if you escrow your homeowners insurance premium?
What is escrow and how does it affect your homeowners insurance premium? An escrow account is a dedicated financial “safety net” managed by your mortgage lender to ensure your home remains protected. Instead of you having to come up with a large lump sum for your homeowners insurance premium once a year, your lender divides that annual cost into twelve equal parts and adds it to your monthly mortgage payment. These funds sit in the escrow account until your insurance bill is due, at which point the lender pays the insurance company directly on your behalf. This “set it and forget it” system is designed to provide peace of mind, ensuring your coverage never lapses and your home stays shielded from the unexpected without the stress of a surprise annual bill.
Most carriers are ok with your homeowners premium being paid by your mortgage company. Furthermore, some insurance companies will even extend the ‘paid in full’ or ‘PIF’ premium discount to those paid in escrow, but you should check to see if your payment method qualifies.
A client of mine had their home insured through Auto-Owners and had the premium to be paid through escrow. With no other changes, other than switching their payment method to ‘in full’ saved them over $873 per year!
If you are unsure if your policy qualifies for a paid-in-full discount, you should contact your agent. But, if you are interested in shopping homeowners insurance prices and learning about savings and coverage, give me a call today.