Got a Refund Check from Your Old Insurance Company? Here’s What to Do Next
By: Ryan Reynolds, CLU® & Emmerson Reynolds
So, you just got a refund check from your old insurance company, and your first thought is: “Sweet! Free money!”
But wait—should you actually keep it? Or does it need to go back to your mortgage company?
Before you cash that check and start planning a weekend getaway, let’s walk through exactly what this refund means, and how to avoid creating an escrow account headache.
What Is an Escrow Account?
When you have a mortgage, your lender usually sets up an escrow account to pay for things like:
- Homeowners insurance
- Property taxes
Each month, you pay extra into escrow, and your lender uses that money to cover these bills. It keeps payments on time and prevents missed deadlines.
Who Paid the Premium? (Follow the Money)
Here’s the key: it all depends on who originally paid your insurance premium.
- You paid directly from your bank account → The refund is yours to keep.
- Your lender paid through escrow → The refund belongs to your escrow account, not you.
What Happens If You Keep the Check?
If you pocket the money even though escrow paid the premium, your escrow account may end up short which means your mortgage payment will likely go up to cover the difference.
That shortage usually leads to your mortgage payment increasing at the end of the year—something no homeowner wants.
What Should You Do with an Insurance Refund Check?
- Call your mortgage company or loan servicer.
- Let them know you received an insurance refund check.
- Ask where to send it and how to credit it properly to your escrow account.
- Keep copies of the check, letter, and confirmation for your records.
Insurance Refund Checks: Keep It or Send It Back?
| Situation | Who Paid the Premium? | What to Do with the Refund |
| You paid the premium directly | You (personal bank account) | Keep the refund – it’s yours |
| Escrow paid the premium | Your lender via escrow | Send refund to mortgage company to credit escrow |
| Unsure who paid | Mixed or unclear | Call your loan servicer for instructions |
Final Thoughts
Getting an insurance refund check feels like a windfall, but whether it’s yours to keep or needs to go back into escrow depends on how the premium was paid.
👉 When in doubt, contact your mortgage company or insurance agent. At Grimes Insurance, we help homeowners across Lubbock and West Texas navigate situations like this so you can avoid unexpected escrow surprises.
📞 Have questions about refunds, escrow, or your homeowners insurance? Reach out today and let’s walk through it together.
