How does an insurance refund work with escrow?

If you've paid your home insurance through an escrow account and your policy is canceled or changed, your insurance provider will issue a refund directly to you, not your escrow account.

You should return this refund to your mortgage lender to apply to your escrow account to pay for the new policy. Failure to do so may result in a shortage in your escrow account, which could increase your future mortgage payments.