Insurance Journal Forums

Lately, we have been running into an increasing number of situations where we are going to write the insurance on a home so we do the app and wait for escrow to contact us to request an Evidence of Insurance. Then, we get a request from the lender saying that until insurance is in force, they can even get final approval on the loan. If we provide evidence at that point, inevitably there are delays upon delays to the point where the policy goes out of force because nobody pays the bill, or the company does the inspection, sees it is vacant and issues a cancellation on it, etc.. (You can imagine the myriad of problems that might arise.) At the very least, the vesting information is never right and we have to redo the whole EOI when escrow actually *is* ready to close.

So, we got wise and started challenging the lenders on this, because it is downright silly to require the borrower-to-be to insure a property before they even have an insurable interest in that property. The response is always the same, "other insurance companies do this and it is never a problem". So in some of the cases, lender talks to the client and says we are giving them a hard time so the client ends up going somewhere else or calls us and jumps on us like *we're* the problem.

Does anyone have a good solution for these situations? I know we are not the only one having to try and educate these... these... people.

We send the evidence but clearly state on the certificate, "coverage will be placed when premium has been paid" and this seems to work with all the lenders. Then we just document our agency management system and when and if payment comes in, we bind coverage.

I always find the title/escrow companies want the EOI 7-10 days BEFORE clsong date. I just don't submit the application, I suspend it, That way if you need to make changes, you can.

The system we use in our office seem to be working well. We talk to the insured while he/she is in a process of buying a property and obtain the information on Escrow. We monitor when they are schedule to close and when they are ready to request an EOI, we send them the EOI and request payment immediately.

If the lender requires an EOI as a condition of closing, we indicate to them that in order to bind the risk we would have to collect some money and that we can bill them directly. Seems to be working for us.

Manny