Home insurance is a must-have for anyone who owns a home. But that doesn’t mean you’re stuck with the same home insurance policy for as long as you live there. It’s important that all homeowners understand how to change homeowners insurance.
In fact, it’s a good idea to shop for homeowners insurance every two years just so you know what’s out there. A lot of insurance carriers offer new business discounts, so it can be worth it.
Reasons for changing homeowners insurance
Quality homeowners insurance is essential if you own a home. If your property is accidentally damaged by a fire or storm, home insurance will pay to repair or replace it. It’ll also cover you if any personal items are damaged or stolen, and provide you with general liability if someone is injured on your property.
That said, not all homeowners insurance policies or carriers are alike. Some may be better suited for your unique situation in life. Here are some reasons why you may want to change homeowners insurance.
- Better Coverage – When it comes to your home, you don’t want coverage that only protects the basics. You want to make sure you’re completely protected in case of a loss. Water Backup and Utility Service Line are two optional coverages that you should consider.
- Bundled Insurance – One way to save money on your homeowners insurance is by bundling it with your auto insurance. Most carriers will offer a bundle discount.
- Better Service – Sometimes people switch insurance carriers because they’ve had a poor claim or service experience. If this has happened to you, you may want to research the service rankings of other carriers.
- Better Price – If you’re looking to save money, it’s a good idea to get home insurance quotes from other carriers. You can easily get quotes online whenever you want.
- You’ve Been Non-Renewed – You could be dropped by your home insurance carrier if the physical condition of your home has deteriorated (e.g., a damaged roof) or for other reasons. If you are non-renewed, and your home is damaged, you would be responsible for any repair or replacement costs. These costs can be quite expensive, so remember to invest in the maintenance and upkeep of your home.
When can you switch homeowners insurance?
You can change your homeowners insurance carrier any time you like. The ideal time is when your policy is set to renew. Typically, homeowners insurance policies last for twelve months. Many policies stipulate that they will renew automatically unless you tell them otherwise.
If you don’t remember when your policy is set to renew, that’s okay. You should receive a renewal letter or email well before the renewal date. As a result, you’ll have ample time to change homeowners insurance—or make adjustments to your current policy—if you decide that’s best for you.
You can also change insurance carriers before your policy is set to renew. In fact, most homeowners don’t change carriers at renewal.
How do you change policies?
Knowing how to change homeowners insurance is key. If you do your research and follow the steps below, it can be an easy way to upgrade your protection or save money.
- Determine your coverage needs — Ask yourself what you and your family want protected. Are you missing any coverages?
- Review your existing policy — A good place to start is your insurance policy’s declarations page. Be sure to note the policy’s effective dates.
- Do some research — Research several different insurance carriers and compare what they offer. Find one that has the coverage you need at a rate you can afford.
- Call your existing carrier — Let them know that you’re thinking of switching. They might upgrade your coverage or otherwise help you.
- Start your new policy — If you still want to change your homeowners insurance, be sure to start your new policy before cancelling your old one.
- Cancel your old policy — Do this after you get a new policy to avoid a gap in coverage. Gaps in your coverage could negatively affect your premium in the future.
- Inform your mortgage company or bank — Make sure you tell them that you have changed insurance carriers. You don’t want them thinking that you don’t have insurance.
Possible refund
You may be entitled to a refund for any unused insurance. If you’ve paid your yearly premium in advance and you cancel your policy before it is set to expire, your old carrier should send you a refund check. For example, if you cancel your policy halfway through the year, you’ll get half your premium back. Check with your existing insurance carrier for details.
Things to confirm
Here are some important things to remember when cancelling your existing home insurance policy:
- Ask your existing carrier to confirm that your policy has been canceled and won’t be automatically renewed. It’s always a good idea to get this in writing.
- Make sure the cancellation date is on or after your new policy’s start date. You don’t want any gaps in coverage.
Declarations page
Your new homeowners insurance carrier will provide you with a document called a declarations page, which is usually the first page of your home insurance policy. Carefully review the declarations page when you receive it from your new carrier.
Basically, a declarations page is a quick summary of your policy. It identifies the key details of your policy, including your name and address, the various coverages you have, the amount of each coverage, and how much each coverage costs.
What if you have a claim history?
Filing a home insurance claim increases your risk in the eyes of your insurance carrier—whether it’s your current carrier or the one you’re switching to. That’s why most carriers will review your claim history.
Generally speaking, if you haven’t filed a claim for an extended period of time, many insurance carriers will offer you a claims-free discount as a reward. You’ll also get the best possible pricing from other carriers if you have a clean record, so it’s a good time to shop around.
If you have one claim, a small surcharge may be added to your premium, but this usually isn’t a reason to shop for new homeowners insurance. If you have two or more claims on your record, your home insurance carrier may decide to cancel your policy. This may also negatively affect your ability to find new homeowners insurance.
All of these guidelines are state-specific, so be sure to check with your carrier.
What if you have an escrow account?
When you take a mortgage out on your home, your mortgage company may open an escrow account. This type of account is designed to hold cash for specific home-related expenses like property taxes and homeowners insurance. When you pay your monthly mortgage payment, the amount that you’re billed includes the cost of these expenses. Your lender pays these bills through your escrow account.
Alert your mortgage company
If you switch home insurance carriers, it’s important that you inform your mortgage company, so they can send future payments from your escrow account to the new insurance carrier. You may be asked to send them the following:
- A copy of your new homeowners insurance declarations page
- Your former policy’s cancellation notice
Required financial strength
Generally speaking, your mortgage company will not tell you which insurance carrier you can use. However, most mortgage companies require you to be covered by a carrier that is rated with a certain financial strength. Insurance carriers with a rating of B+ or higher are considered highly likely to pay claims and meet their long-term obligations to customers. So, in this way, mortgage companies can have a say in your decision.
