does it matter to the insurance company if a mortgage is paid off?
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UPDATED: Jan 10, 2019
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Insurance Question from Seffner, FL
Asked on 01/10/2019
does it matter to the insurance company if a mortgage is paid off? should rates change if mortgage is paid in full?
Answer given on January 13, 2019
If you pay off the mortgage on your home, there is no change to the homeowner policy other than the obvious point that the mortgage company should be removed from the insurance policy. This should be done promptly so if there is a homeowner claim, any claim settlement will be paid directly to you without the mortgage company being involved.
You will need a copy of the settlement of the loan to send to the insurance company or your agent. Usually a certified copy is not required, but check with the insurance company or agent to confirm that.
The amount of insurance on your home should not change, since insurance companies insure your home for its replacement cost and the amount of the loan is not a factor. However, be sure you have kept the insurance amount up to the current replacement cost of building in your area, since recently many homeowners have found they were grossly underinsured at the time of a major loss. The insurance company has a responsibility to keep your home insured, but so do you as the homeowner.
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