Mortgage company error = no insurance on my home: legal advice please!

My mortgage company F’d up big time and I need legal advice?

My old lender was recently bought out. The new lender contacted me several weeks ago asking for homeowners verification, and for the policy info, which I provided. I received a letter from my homeowners insurance company last week (I’ve been with this company for 10 years) informing me that they had not received payment and my policy was due to be canceled within a week if payment was not received.

Since my policy is paid through my lender via my escrow account, I had a total cow. It turns out that the mortgage company sent the premium to the wrong insurer. I was on the phone with both my lender and my insurance company all week last week trying to get this straightened out and, at the 11th hour, it looked like my lender had cut a new check and overnighted it to my insurer.

I learned from my insurer this morning that my lender shorted the check $11 and my policy is now canceled. Now, as I said, I’ve been with this insurance company for 10 years and no other insurance company around can come close to touching their rates. If I’m forced to go with another insurer, wouldn’t my lender be liable for anything above-and-beyond what I was paying?

The underwriters at the insurance co. already extended the policy 1 week past the cancellation date and our lender screwed up a second time, causing the policy to automatically cancel. We have no insurance right now, and my lender is supposedly overnighting payment to get the insurance reinstated. I plan on getting an escrow statement ASAP to ensure that I’m not paying for all of this overnighting and canceling of checks.

I’m so freaking angry right now I can’t think straight – what would you do?

Answer #1: I had a similar situation a number of years ago and basically what happened is that the lender can cure the deficit with the insurance company, but the policy will start new from the point that full payment is made. Whatever time has passed between the cancellation and the re-instatement is a liability to you and there are two options. One, you can sign an affidavit that states that you have no claims and will not file any claims for the liability period and move on, or, you will have to pressure your lender into agreeing to cover any liabilities you incurred during that period. I chose the former because it was 10 days and I had no claims. If you choose the latter it could take a while as you haggle with the lender.

Answer #2: Insurers are usually forgiving when it comes down to these issues unless you have a prior history of claims against the policy. I would send them the $11 dollars and ask them to ensure the policy is retroactive to the renewal date so you have continuous coverage for peace of mind.

PS. I hate it when people at these companies screw up, and then we have to spend a bunch of time on the phone doing their job. I think we should get paid for our time and effort from the company that screwed up.

Answer #3: Something similar ahppened to me : Rob in Boston : 4/11/07 10:55 AM
basically I had to drive and hand deliver a check at the 11th hour so as not to get booted from the policy.

Answer #4: One better: My mortgage company was paying 2 insurance companies for a couple of years. In addition, they paid property tax on the wrong parcel for several years. I received a tax notice from my county, saying that I was 2 years behind. Anyway, my fault for not paying closer attention to my escrow payments, and in the end, I had to do all the legwork because the mortgage company really couldn’t care less. ABM-Amro is anyone cares to know.

Sorry, no advice there. But at least you know you’re not alone.

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