Higher homeowner’s premium when paid through escrow?

Was switching carriers for all of my insurance. Paid for the auto policies then the agent asked for payment of homeowner’s policy. I said it’s paid through escrow since I have a mortgage. The agent said she’d have to recalculate the premium. It went up well over 10%! I have never heard of a different premium based on escrow versus paying out of my checking account. Checked with my current carrier and they don’t charge differently. It’s just a difference of where the funds come from so no reason to charge different premiums.

Is this a common thing? I try to stay educated on these things and in thirty plus years of having mortgages have never heard of this practice. Have I been passing up savings all these years to the tune of many thousands of dollars? Or is this a new practice and possibly not industry wide?

I don’t know if this is the reason, but maybe somehow it could be…

If you have escrow pay HO, property taxes, etc., they want at least 2 extra months’ worth to have on hand as a reserve (maybe more now, I haven’t kept up on that). So if your HO premium would normally be $1200, or $100 a month, you’re really gonna pay $100 x 14 months = $1400 / 12 months = $116.67 per month added to your mortgage payment. Next year, the amounts are recalculated and added to your mortgage. If your escrow company ends up collecting more than 2 months’ reserve, they’ll issue you a refund, not the HO company. So maybe your HO company was adding that 2 months’ reserve to their first calculation.

Do you like having escrow?

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I don’t think that is a reason for the insurance carrier to charge a higher premium if paid from escrow.

Yes and no on do I like escrow. It keeps me from forgetting to make the insurance or tax payments. BTW, the tax office doesn’t increase your taxes if paid out of escrow.