Who's paying your Homeowners Insurance?

Sad but true story involving one of our clients from last week. The client had insurance on their home through our agency with a mortgage. The mortgage was to pay the premium for the insurance. However, the home had been paid off and there was no longer a mortgage. Once this happens the individual/ insured does become responsible for the insurance premium. The insured was not aware of this situation and the payment for the homeowners policy was not paid on the due date. Our agency received a notification from the insurance company that no payment had been received and set a pending cancellation for non-payment. Our agency gave a courtesy phone call to the client to inform them that there was a pending cancellation for non-payment. However, the phone number that was on file for the insured was no longer in service. A few weeks later we received another notification from the insurance company that the policy had indeed cancelled for nonpayment. Out of courtesy once again, the agency sent a letter through the mail to the client explaining that the homeowners insurance had cancelled and that we needed a working phone number for our records. No response was received from the client. About a month after the policy did cancel, the client's daughter started a fire in the upstairs bedroom of the house. The fire resulted in severe property damage. A couple days after the fire, the agency received a phone call from the client to see if there was coverage. We explained that there was no coverage as the policy had cancelled due to the premium not being paid. The client went on to try to pay the old premium and get the policy reinstated. Unfortunately, that was not possible as the fire had already happened and the insurance company was not going to reinstate the policy now. So there was no coverage for the fire.

Couple valuable lessons we can all learn from this story. One, if your mortgage is paying your homeowners insurance, please be aware that once the home is paid off, you (the insured) is responsible to pay the insurance premium going forward. Second, if your trusted insurance advisor calls or sends mail, don't just disregard it, be sure to read anything sent closely and respond in all circumstances. Third, be sure if your phone number or mailing address changes, to advise your insurance advisor of such right away. After 60 years in the industry crap really does happen and you want to make sure you're protected when that crap happens.