Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
In theory that is correct. Your mortgage company pays an annual premium if your premium is paid out of an escrow account. With the advent of the widespread use of computers companies have found ways to extend payment schedules. On property policies, in particular, the requirement for the premium to be posted must be met before the period of coverage starts.
Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
In Connecticut, when one is buying a home, the mortgage companies will typically require the first year's premium to be fully paid prior to closing. If the future payments are then to be made from an escrow account, that will be done for the following year upon renewal.
Even if you are paying the Insurance Company directly, however, each payment that you make is for coverage moving forward. If you pay the full amount on renewal, you are paid for the full 12 month policy period beginning at the renewal date. If you have a monthly pay option, then each payment that you make is for a months' worth of coverage.
So in effect, you are paying for future continuous coverage or paying "up front".
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Even if you are paying the Insurance Company directly, however, each payment that you make is for coverage moving forward. If you pay the full amount on renewal, you are paid for the full 12 month policy period beginning at the renewal date. If you have a monthly pay option, then each payment that you make is for a months' worth of coverage.
So in effect, you are paying for future continuous coverage or paying "up front".