Insurance And Sub-2
i have read the insurance and sub2 article many times and understand the principles involved. i just need clarification on the steps involved.
1) buy land lord policy in the name of my LLC and naming the prior owner as loss payee and the mortgage company as mortgagee
2) cancel the previous owners insu policy, using my power of attny
3) notify the motgage company of the change in insurance policy, again using my power of attny. ( or is this not a needed step?)
is this the correct procedure? i understand the basics, just need some help in the step by step aspects.
Good morning!
1.) Actually, name the prior owner as "Additional Insured", not "Loss Payee". As an Additional Insured, the policy will only garner them liability protection. As a Loss Payee, they would be party to any property claim settlement.
2.) May be a good idea, just to keep things "clean", but remember any respective refund check will be sent to the First Named Insured, in this case the prior owner. The policy will eventually lapse, since the prior owner has no reason to keep it. I would actually do this last, once your new policy is set up and the mortgage company notified (see #3).
3.) Your insurance company will automatically send a Mortgagee copy of the policy to the mortgage company. You really don't need the POA to do this, as the new policy is "yours".
Feel free to PM me if you have more specific questions. Hope this helps.
Tim
thank you for the insightful response!! how do you handle the prior owners insurance when it is escrowed with the monthly mortgage payment?
eric
Hi Eric,
Usually handle it the same way. The refund will probably be sent to the prior owner. Make sure, though, that the mortgage company reduces the payments accordingly, once you provided proof of the new insurance.
Best regards,
Tim