Can you get a refund for accidently paying mortgage insurance on house that you no longer own?

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Mom sold house to buy smaller one. Old homeowners insurance company called and told her her mortgage insurance policy was going to expire and they needed a check asap. She mailed a check before realizing what had happened. A year went by before she knew what happened. We requested a refund, and they said they would refund one month. Should the insurance company give her a refund? The new owners of her old house also had a homeowners policy”

Asked July 27, 2016

1 Answer

This is a tricky situation. The insurance company seemed to have no idea the client, the writer's mother, was going to sell the house. If so, they could have prorated the insurance till the end of the month she moved.

However, since she paid the bill, moved and didn't realize the error until one year later, a full refund would be unlikely. It was generous that the insurance company gave her a refund for even one month. It would be nice if the insurance company reimbursed the mom for her insurance that was not needed on a home she no longer owned. It is doubtful that they would be legally required to do so. It seems to be an unfortunate error by the insured. She had paid for mortgage insurance for a home she no longer owned.

The lawyer or representative that was present during her home sale closing should have told her about the kinds of insurances she can cancel on the sold home.

Even though the new owners obtained insurance on the home they purchased from the mom, they generally do not inquire about other policies on the home. If it happened to be the same insurance company, they may have realized the address already had coverage and explained that to the client. Since more than likely, it was not the same company, I'm afraid your mother made a costly error and no one is legally responsible for reimbursement of her insurance premium.

Answered August 1, 2016 by Parker2009

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