Do You Get a Refund If You Cancel Homeowners Insurance? Yes, in most cases, you do. However, the exact refund depends on your insurer, policy terms, and when you cancel. Most providers offer a prorated refund for any unused premium, especially if no claims have been made.
In this guide, we’ll explore the question: Do You Get a Refund If You Cancel Homeowners Insurance?, how this affects your mortgage, cancellation procedures, and common policy-related questions like rodent damage and auto-renewals.
Table of Contents
Can You Cancel Your Homeowners Insurance?
Absolutely. You’re allowed to cancel your policy at any time, but consider these precautions:
- Have a replacement policy ready to avoid lapses in coverage.
- Inform your mortgage lender if your insurance is paid through an escrow account.
- Submit a formal cancellation request, ideally in writing, including your name, policy number, intended cancellation date, and reason for cancellation.
Canceling without preparing could result in higher monthly mortgage payments or even a lender-purchased force-placed insurance policy.
🔎 Related reading: How to Cancel Credit Genie Subscription
How Refunds Work When You Cancel
Most insurance providers offer prorated refunds, meaning you’ll be refunded for the remaining months or days left in your policy term.
🔢 Example:
If you prepaid a $1,200 annual premium and cancel after 9 months, you’ll receive a refund for the remaining 3 months, around $300 minus any applicable cancellation fees.
Are There Cancellation Fees?
Yes, some companies may charge a short-rate fee, usually 10% of the unused premium. These fees compensate the insurer for early termination. Always check your policy or ask your agent for specific details.
📘 Learn more: National Association of Insurance Commissioners (NAIC) on cancellations
What Happens to Your Mortgage If You Cancel Homeowners Insurance?
If your premium is paid through a mortgage escrow account, here’s what might happen:
- Your refund may be sent to your lender, not you directly.
- If there’s a coverage lapse, your lender may purchase force-placed insurance, which is often more expensive.
- Your monthly payments might rise to make up for the shortfall in the escrow balance.
📌 If you receive a refund check, endorse it “For Escrow Deposit Only” and forward it to your lender.
💡 More on this: Consumer Financial Protection Bureau – Escrow Accounts
Does Homeowners Insurance Cover Rodent Damage?
Typically, rodent damage is excluded from standard policies. Rodents are considered a maintenance issue, not a sudden or accidental event.
If rodent issues are a concern, consider a pest control plan or home warranty as an add-on. Always review your coverage to confirm exclusions.
📖 Reference: Insurance Information Institute – What’s Not Covered
Does Homeowners Insurance Automatically Renew?
Yes. Most policies automatically renew unless you or the insurer takes action. Here’s what to expect:
- You’ll get a renewal notice 30–60 days in advance.
- If you do nothing, your policy usually continues automatically.
- If you plan to switch, cancel before the renewal date to avoid double charges.
📌 Always read your renewal documents carefully. Premiums or terms may change.
How to Cancel Homeowners Insurance and Request a Refund
Here’s a step-by-step breakdown:
1. Compare New Policies
Before canceling, shop around for a replacement. Use comparison tools like Policygenius or get quotes from multiple agents.
2. Notify Your Insurer
Send a written cancellation request with:
- Name, address, and policy number
- Preferred cancellation date
- Reason for cancellation
- New insurance details (optional)
3. Inform Your Mortgage Lender
Especially important if you pay insurance via escrow. Share your new policy details and confirm they’ve received the cancellation notice.
4. Request and Track Your Refund
Ask for a prorated refund. You’ll usually receive:
- A refund to your card or bank (if paid digitally), or
- A physical check mailed within 7–15 business days
If your mortgage paid the premium, the refund typically goes back to the lender.
FAQs: Do You Get a Refund If You Cancel Homeowners Insurance?
1. Do You Get a Refund If You Cancel Homeowners Insurance?
Yes, you generally receive a prorated refund for the unused premium. Check for cancellation fees.
2. What If I Already Paid the Full Year?
You’ll be refunded for the unused portion, usually calculated daily.
3. Can I Cancel After Selling My Home?
Yes. Just make sure your policy ends on the same date as the property transfer. Include proof of sale if asked.
4. Will It Affect My Credit?
Not directly. But if your lender buys force-placed insurance due to a lapse, your escrow payments may rise, which could impact your finances and credit.
5. What If I Don’t Replace My Policy?
Your lender will likely impose force-placed coverage, costlier and less comprehensive than standard homeowners insurance.
Final Thoughts
So, Do You Get a Refund If You Cancel Homeowners Insurance? In most cases, yes, especially if you cancel early and haven’t filed any claims. To ensure a smooth process:
- Line up a replacement policy
- Inform your lender
- Request a refund
- Review your policy for fees or exclusions
Proper planning prevents escrow issues and unnecessary financial surprises.
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