Bank escrow didn't pay insurance

[Stevenmags]

What is the name of your state? FL
We just received a letter from our bank stating that our homeowners'
insurance was cancelled due to non-payment. Our bank is holding the
money we paid them to pay it. And they have given us 60 days to secure another policy or they will charge us 3.5 times more for their insurance. Can they do this? How do we get our money back from them?

 

[efflandt]

Are you sure that your escrow is supposed to cover insurance (mine only covered property taxes)? If it is only for taxes, they reserve a certain amount over that to account for rising taxes the next year. So maybe you are confusing that reserve with enough money to pay insurance.

Has anything changed since the last time they paid it (was your loan sold to somebody else)? What did they say when you asked them why they did not pay your insurance on time? And if your county has a website, make sure your lender pays your property taxes on time.

Be aware that if they provide insurance (at inflated rate) it is likely only to protect their interests (loan amount), and not your interests (rebuild cost, contents, etc.).