Q - WHAT IS THE BEST WAY TO HANDLE INSURANCE POLICIES WHEN THEY ARE ESCROWED? THE FIRST PROPERTY WE BOUGHT HAS AAA INSURANCE AND THE MORTGAGE COMPANY ESCROWS THE PAYMENTS. I ALSO HAVE MY OWN, NON OWNER OCCUPIED POLICY ON THE HOUSE. I WANT TO ELIMINATE THE ORIGINAL OWNERS POLICY TO SAVE SOME MONEY. HOW DO I APPROACH THE MORTGAGE COMPANY WITHOUT

ALARMING THEM OF THE SALE AND GET THE INSURANCE CHANGED OVER TO ESCROW MY POLICY?


A - Insurance can be the toughest challenge with subject to's. We have a very friendly agent that helps us make this happen. It also helps that we have done about 50 of them in the last few years. Even then they can still get tricky.


We have attempted to keep two policies in place (one being the old policy and the other being our landlord policy) but as you said that can be a few extra dollars and there is some question about which policy would pay if there was a challenge.


We usually cancel the existing policy with the Power of Attorney that we had the sellers sign. We then have our agent issue a new policy in the name of the trust and have our agent send it to the mortgage company. The only times that we have had trouble is when the existing policy did not get

cancelled for whatever reason and our policy does not get paid from escrow. Our agent will let us know when that occurs. There may also be a refund from the old insurance company and you want to make sure that you have it sent to you.


We have never had the mortgage company get alarmed by this. If they did, we would send the insurance department the letter that is in Lou's package explaining that the property has been placed into a trust for estate planning purposes.