Homeowner's Ins. Expired

What is the name of your state? New Jersey

For the past 15 years, I have paid my homeowners insurance annually (not in escrow with my mortgage). Last year I somehow missed the payment notice(s) and I was without insurance for a year. My only explanantion is that our company changed hands and I might have ignored mail coming in from the new company as I didn't recognize the name. I was not allowed to reinstate the insurance with that company, but I was able to get a policy with another company for about $600.

However, now my mortgage company (AB Amro) is billing me for the year that I was without insurance at a ridiculous rate! We are taling about $2600 for the year. Is there anything I can do about this? I understand that I was in violation of our agreement to have insurance on the property, but this rate is crushing!

Any advice is welcome.What is the name of your state?What is the name of your state?

Did you figure this out and get a new insurance policy before or after you got the insurance bill from your mortgage company?

In other words what time period (start and expiration dates) is the expensive insurance provided by your lender good for (which only protects them, not you). If it is for the upcoming year I could see it, but it would certainly be strange if they got a policy issued now for a time in the past. But maybe they self-insure and it is more like a fine.

The $2600 fee is for the past time period! So, essentially they are billing me for a time period that has absolutely no risk or liability...the house is fine and has no claims. So I guess you could say they are fining me. ABAmro contracts this out to Empire Fire Ins. Co. and I really feel this is price gouging.

Any suggestions or advice?

You're missing the point.

Emerald said:

The $2600 fee is for the past time period! So, essentially they are billing me for a time period that has absolutely no risk or liability...the house is fine and has no claims. So I guess you could say they are fining me. ABAmro contracts this out to Empire Fire Ins. Co. and I really feel this is price gouging.

Click to expand...

They put a single interest policy on your structure and, yes, these are very expensive policies. Insurance is all about risk. If a loss happened to your house during those 12 months, the mortgage company wanted their insurable interest covered. It's easy to look back and say nothing happened; but, what if it had? This policy would have paid the mortgage company only - you would have been on the hook for any liability or contents loss.

I suspect you were sent three separate payment notices, all of which you agree you ignored. The mortgage company had absolutely every right to cover their insurable interest.

You're going to have to pay. Consider this a very small price - they may have been able to call your loan since you didn't follow the terms of the contract.

There are also, with that very expensive policy, geting insurance on a house in ANY condition. They haven't sent out an agent to inspect the risk, so the insurance policy, while expenisve to you, would cover a house in any condition. They also don't know that a claim won't be filed in the future for a past loss/incident.

You got off pretty cheap.

Emerald said:

The $2600 fee is for the past time period! So, essentially they are billing me for a time period that has absolutely no risk or liability...the house is fine and has no claims.

Click to expand...

Using your logic that premium shouldn't be due since nothing happened - would you expect to be refunded your insurance premium at the end of each coverage period if you didn't have a claim? No, because insurance is all about risk.

I realize you're running on emotions. Your oversight caused this problem. $2,600 is a pretty steep price for a single interest insurance policy that only protects the mortgage company. That's simply the way it is. Moburkes is absolutely right - your house may be in the finest condition; but, the single interest pool in which it was insured lumped all houses in all conditions together.

Let me give you a different perspective - during that 12 months you would have suffered more of a loss had you had a fire and lost all of your contents or the little kid next door broke his arm on your property and his family sued you for $100,000. All of that would have come out of your pocket. This is because during that 12 month time period you had no coverage for contents and no coverage for personal liability. There is a good chance the single interest policy would have only covered the mortgage amount, so you would have lost all equity. Could it have been worse? Absolutely!

You got off pretty cheap. I can guarantee this will never happen to you again.