What typically happens to a borrower’s homeowners insurance refund at closing?

During the closing process, any refund from a borrower's homeowners insurance is typically issued outside of closing. This happens because insurance policies often have prorated premiums based on the closing date, and any overpayment or unused premium is usually refunded directly to the borrower after the policy has been canceled or adjusted. It does not get included in the closing statement since it is a separate transaction from the financial dealings occurring during closing.

The homeowner receives this refund to ensure they are compensated for any coverage they paid for but did not use as a result of selling their home or obtaining a new policy. Understanding this process helps buyers manage their finances effectively during the transition into their new property or after selling a home.