Different lenders need to verify it at different stages - here in California it's common for lenders to not need the actual evidence of insurance until closing, but still want to know how much the premium will be prior to closing (for debt to income calculation purposes) and will just accept a quote for that. However in other states (primarily those east of the Rocky Mountains) the evidence of insurance is a prior to final documents requirement like an appraisal, title report, W-2's, etc.
Are you working with a smaller insurance company? Perhaps one that brokers out the insurance to a bigger company?
This problem often happens with those types of company's since they aren't the one providing the policy, when they request it for some odd reason going back and changing effective dates, or actually getting a copy of the policy is a royal PITA. Often they won't even provide any evidence of insurance until closing, and will just provide a binder until then, which lenders can't accept. Or to provide evidence of insurance they require the premium be paid upfront, prior to closing.
Almost all of the major insurance companies don't have issues with this, and can provide evidence of insurance within a day or two of you submitting your insurance application and without receiving upfront payment.
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