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  • Lacy

Mortgagee and Lien Holders - what if they aren't listed?

Updated: Feb 13, 2023

We receive requests all the time from mortgagee companies or lien holders requesting to be listed on your policy or requesting updated information. We will NOT release information or update any information on your account unless they 1. have a borrowers authorization that you signed or 2. we speak directly with you and get the ok to make the change or send the information. And if those changes don't occur there are a variety of things that can go wrong. I know, you're super excited to hear what they may be. I will explain that and I will explain why it's so important for you, as our insured, to let us know when you refinance or when you purchase a vehicle and have a loan on it to let us know who that lien holder is.

Let's talk about your homeowners, escrow and your mortgagee. Most of us escrow our insurance and taxes into our mortgage payment. Great, right? Saves us time, we know the monies are there when our yearly taxes or homeowners comes due. Fantastic. HOWEVER... when you refinance or when your mortgage is sold to another company, we are usually the last to find out. And we usually find out when we receive either the cancellation notice or the angry phone call from you when you receive the cancellation notice. Unless we are contacted and told that there was a change to your mortgagee, we have no way of knowing that information. There is no mortgagee fairy that contacts us to tell us a change has occurred.

If your mortgagee is listed as XYZ Company when you first write your homeowners, but then in 6 months it's sold to ABC Company and we aren't notified? Guess what? When your renewal comes up, XYZ Company is still going to be billed. They aren't going to contact you, they are going to throw away that notice. In the meantime, your carrier is processing your cancellation because payment wasn't received. And why wasn't payment received? Ahhh.. you guessed it. Because ABC Company was never listed on your policy so they were never billed, therefore the premium was never paid. As the named insured on your policy, it is up to you to let us know of any changes. This includes mortgagee changes.

Now how about the lien holder on your auto? Difference with this is that your auto insurance is not paid by your lien holder. However, if you don't tell us there is a lien holder or you refinanced your vehicle and didn't update your lien holder, that lien holder can force place insurance on you. And most of the time, their insurance rates are going to be a LOT higher than your regular auto insurance. If you don't provide proof of coverage with no lapse, they can... AND THEY WILL force place insurance on you and add it to you monthly car payment. No fun Folks... No fun! We don't ask for this information because we are nosey... we ask because we know the consequences to you, as the policy holder, if they aren't provided the paperwork they require.

Now, a quick explanation as to why these people need to be listed on your policies. It's pretty simple really. If you have a loss to your home or auto, they want their money, too. I know I know.. everyone wants money. The great joys of adulting. Do you wish for your blanket fort and crayons as much as I do?

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