Selling your home during your insurance period should not present any major problems. Much depends on how your home insurance is handled. This means whether you pay directly to your agent or through a mortgage escrow account.
Working with escrow
An escrow account takes a portion of your monthly payment and saves it for making property tax and insurance payments. The payments are then sent to the tax department or insurance company when the money is due. If an insurance payment has been made recently, the refund will likely come from the insurance company.
If you have funds built up for the next insurance payment, your mortgage company may refund you directly, when your total mortgage account is closed. You should ask your mortgage company, “What happens if I sell my house?” for any escrow related questions you have.
Working with an agency
If your make home insurance payments directly to your agency, you will normally receive a pro-rated refund or credit. For example, if your yearly premium is $360, it works out to $30 per month. If you were to cancel or change your policy after 10 months, you could expect a credit or refund of $60. The amount would vary by the actual company.
What often happens is that you may simply transfer the amount of credit to a new policy. If you are purchasing a different home, your credit could be applied to the new insurance, or refunded if you open an escrow account.
You do need to remember that you should not cancel your insurance too quickly when you sell your home. Do keep your insurance until the sale of your home is legally completed. Please contact us with any questions you have about changes to your insurance policies, we are always happy to help.