Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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EscrowUsing escrow to pay for your homeowners insurance monthly premiums is a standard practice that makes sense for most home owners. That is because an escrow account refers to funds set aside specifically to handle a portion of your mortgage payment that goes to your mortgage insurance, homeowners insurance and your local real estate taxes.

By having these types of payments dealt with automatically through an escrow account each month you eliminate any worries about making late payments. That becomes the lender’s responsibility.

What are the pros and cons of using escrow for your home insurance? Read on to learn more and then also be sure to enter your zip code above to find the very best home insurance for you!

Using Escrow for Home Insurance: Pros & Cons

The #1 benefit to using escrow for homeowners insurance is the convenience aspect. However, there is a downside to taking advantage of this convenient payment method. Your homeowners insurance premium (and the other escrow based payments) is typically due only once a year.

Yet, if you choose the escrow method of payment, the amount will be paid monthly with your mortgage payment. That means that the monthly amount is taken out of your hands and any interest you may have earned on it is gone. Instead, your home insurance provider gets to add those funds to their account and make money on the interest earned.

You do have the option to get a waiver of escrow and pay your homeowners insurance on your own. To make this work you must be disciplined enough to set those funds aside into some type of interest bearing account where it will still be at your disposal when needed. High interest savings accounts or short term CD’s are both possibilities. Of course, you can’t be tempted to spend the funds either, because you will be required to pay the bill when it comes do.

Frankly, most folks agree that they don’t the have to time or discipline to follow through on the non-escrow waiver method. The convenience is very appealing. Keep in mind that any late payments will also affect your FICO score and credit ratings. And even though making some more money on the interest is appealing you really need to weigh the pros and cons.

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Does my Credit Score Impact Homeowners Insurance?

At first glance the topic of your credit score may seem like a separate issue from that of your escrow account and home insurance. The truth is that your credit rating has an effect on the rates that all your insurance providers will offer you. Of course, factors like the location and condition of your home matter too. But your credit rating is something that you have (almost) complete control over.

Deciding whether or not to use escrow to pay your homeowners insurance should be partially decided based on your concerns about managing, maintaining or improving your credit score. If you have a great rating and a good track record for managing your finances then you may be one of the few people ready to handle the non-escrow method of payment.

If you need to find out what your credit score is there are three companies that will provide this information for you. The credit reporting companies and their contact numbers are as follows:

  1. Experian 1-888-397-3742
  2. Equifax 1-800-685-1111
  3. Trans Union 1-800-916-8800

It’s a good idea to check your scores once a year as it’s not common for mistakes to occur that can lower your score. You should also look into your homeowners insurance yearly and compare the rates that your provider is giving you with others on the market. Ask about discounts and you might be surprised at the savings available; even if you decide that jumping through the non-escrow payment hoops is a bit too risky or too much work for you at this point in time.

Finding the Best Homeowners Insurance Rates

So the bottom line is that using escrow for your homeowners insurance is probably the smartest move. Take the information above into account to make a decision that is right for you. Enter your zip code in now to start finding the best homeowners insurance rates online!