I Just Paid Off My Mortgage: Should I Notify My Insurer?

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Article Contents
Picture of By <span>Matthew Roberts</span>
By Matthew Roberts

Updated on October 10, 2024

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Picture of By <span>Matthew Roberts</span>
By Matthew Roberts

Updated October 10, 2024

Visit author page

3 minute read

Article Contents

Congratulations, you’ve finally paid off your mortgage! Now, is it necessary to notify your insurer that you’re done with your payments? Keep reading to find out why it’s essential, and what other steps you must take to move forward as a full-fledged homeowner.

Notifying My Insurer After Paying Off My Mortgage at a Glance 

  • Notifying your insurer is one of the first steps you have to take after paying off your mortgage.
  • When notifying your insurer, also make sure to remove your lender as a “loss payee” on your insurance policy.
  • Home insurance isn’t mandatory in Canada, but by having it, you’ll have peace of mind knowing that your largest asset is protected.

Why You Should Notify Your Insurer That You’ve Paid Off Your Mortgage

You should notify your insurer that you’ve paid off your mortgage because of a little thing called a “loss payee clause,” which makes your mortgage lender your beneficiary. This clause protects your lender’s financial interest in your property. As the loss payee, your lender gets paid first in the event of loss or damage to your home. 

If you don’t want your benefits to go to your lender long after their financial interest in your property has been extinguished, then it’s best to notify your insurance provider once you’ve finished paying your mortgage and make amends to your policy to remove your lender’s status cas a loss payee.

What Else Should You Do After You’ve Paid Off Your Mortgage?

Aside from notifying your insurance provider and removing your lender as a loss payee, make sure to take the following steps after paying off your mortgage:

Cancel automatic payments:

Stop automatic payments to your lender to avoid the hassle of requesting for a refund on unnecessary payments.

Request a refund on your escrow account:

Get a refund on any remaining balance in your mortgage escrow account. Typically, lenders give an automatic refund within 20 days of completing payments. If you don’t get any, notify your lender.

Get in touch with your tax collector:

When paying off a mortgage, your property tax statements are billed directly to your mortgage servicer. Let them know that all statements should be sent to you moving forward.

Maintain records of all homeownership-related documents:

From your closing disclosure to your title insurance, make sure you keep records of all important records pertaining to your home.

What Should You Do After Paying off Your Mortgage

Should You Maintain Homeowners Insurance After Paying Off Your Mortgage?

Paying off your mortgage means becoming the sole owner of your property. When this happens, you also become responsible for covering the full cost of your homeowner’s insurance. 

For some, maintaining home insurance can feel like a huge financial burden — especially since home insurance is not mandatory in Canada anyway. However, there are many benefits to keeping your homeowner’s insurance, such as:

In the event of a burglary, home insurance covers the cost of replacing stolen items such electronics, appliances, furniture, and clothing. It also covers the cost to repair parts of your property that were damaged in the break in, such as doors, windows, and other entryways.

Natural disasters such as storms, earthquakes, fires, and flooding are unpredictable events that can cause significant damage to your property. Home insurance doesn’t just cover the cost of repairing damages to your roof, windows, and the structural integrity of your foundation, it also covers the cost of temporary shelter should your home become uninhabitable. As with stolen or lost items, home insurance also covers the cost of replacing personal property that’s damaged by a natural event.

Most homeowners get a combination of personal property coverage — which provides the above mentioned benefits — and liability coverage, which shields you from legal liability for losses caused by injury to others and damage to others’ property. 

Say, for example, your kids have a playdate and spend the day out in your backyard. Then, one of their friends falls from your treehouse and needs to be rushed to the hospital. Your home insurance should cover the emergency room bill and any necessary treatments for the child.

Just knowing that your insurer will have your back should any of the above scenarios happen can give you a sense of security and safety in your home. 

To sum it up, home insurance protects what is likely your largest asset, and keeps you from financial ruin should something happen to your home.

Key Advice from MyChoice

  • Notify your insurer immediately after paying off your mortgage to remove your lender as a “loss payee” and ensure that future claims are paid directly to you.
  • Maintain and organize important homeownership documents, such as closing disclosures and title insurance, for future reference.
  • Find the best rates from best home insurance companies with MyChoice. Compare quotes now and save more money on home insurance today.

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