Lender Pay Is No Guarantee Of Payment

Lender Pay Is No Guarantee Of Payment

| October 13, 2023

We've been shouting from the rooftops that there are no more grace periods in insurance because we don't want you to go without coverage.  Unfortunately, this has happened already to some of our clients, simply because they assumed that their autopay was in place, or that their lender was going to take care of it.  In the past, carriers gave grace periods of, for instance, 10 days, but that is often no longer the case.  If your payment method fails, they may send you a warning letter, but by the time you receive it, it may already be too late.

If your policy expires due to non payment, you have no coverage.  The consequences can be devastating. You cannot file a claim for any loss, and if you get into an accident, and you are at fault, you are liable for all damages and you will be on the hook to pay a judgment against you.  Because the property AND auto market is so restrictive, it can be difficult to help you find new coverage.  Your carrier might not take you back, and if they, or another carrier will, you may be subject to a detailed application process, and a waiting period of up to 20 business days.  Of particular concern in the current property insurance climate in CA, more than 70% of the market is closed, so your choices are more limited than they have ever been.

Ultimately, you are responsible to pay your bill, so please consider the recommendations below to ensure you don't get into a tough situation in this crazy market, where it can be difficult to obtain new coverage.  

For all of your policies:

We recommend you enroll in autopay, preferably with a checking account that has a minimum required balance and/or overdraft protection.  Even with this step, double check that your payments were made BEFORE the expiration.  For policies that are NOT in lender pay, you can set up autopay, and monitor your accounts from your customer portal: Pay Your Bill

Whether or not you are in autopay, open every piece of mail, every email, and take our call when we contact you for your policy review.  If a carrier requests that you send them information, and you do not reply by the due date, your policy may be canceled.

For homeowner policies that are in lender pay:

Just because you are in "lender pay," do not assume that your bill has been paid.  Often, because you see your monthly payments in your escrow statement, you assume all is well, which it may be, until the new invoice is not paid on time by your lender. We see two common problems:

1 The lender paid, but waited until the last minute, or their payment took too long to post to the carrier. 

2 The "Mortgagee Clause" and loan number listed on your current policy is incorrect.  The most common reason is a refinance or your loan was purchased by another lender, but the insurance company wasn't notified by us in writing of this change.

Your lender listed on your policy is sent a bill by the carrier 45 days before expiration, the same day that you are mailed your policy declarations for your upcoming renewal.  Please look it over carefully.  If the "Mortgagee Clause" and loan number is incorrect, please contact your lender immediately.  Ask for them to provide the correct "Mortgagee Clause" and loan number and send it to us in writing.  We can update your policy, but that will not generate a copy to the lender automatically.  As your agents, we can, by request, send a copy of your declarations and the most recent invoice, but if it's too close to the expiration date, you will have to pay it yourself and resume lender pay the following year.

If the lender information seems correct, just continue to track it.  If the bill is not paid within 2 weeks of expiration, contact your lender to inquire if/when they received the bill, and when they paid it.  Remember, payments sent by lenders can take 14-30 days to be received by an insurer.  

Finally, you may only be required to be in lender pay for the first year of home ownership. If you would like to take charge of this yourself, we recommend that after your most recent invoice is paid by your lender, you enroll in autopay for the following year.