How to switch home insurance companies

Whether you’ve found a company that can offer you a cheaper rate or you’re just not satisfied with your current company’s customer service, you might be wondering: can I switch home insurance companies? In most cases, the answer is yes! However, because home insurance is required by mortgage companies, you may want to learn the steps you need to take to change home insurance carriers to avoid any overlaps or gaps in coverage that could cause issues with your lender. Bankrate’s insurance editorial team includes licensed agents who have personally helped hundreds of policyholders properly switch their homeowners insurance. Read on to learn more.

Can I switch home insurance at any time?

Yes, you can switch your homeowners insurance carrier at any time. However, you may want to be aware of a couple of factors before you make the switch. First, depending on your carrier and policy, you may be charged a cancellation fee for terminating coverage before the end of the policy term. Second, a lapse in coverage may increase your insurance rates and leave you without financial protection for your home, so you’ll likely want to ensure you have a new policy in place before the old one ends.

How to switch home insurance

Switching home insurers should be a fairly simple process. To do so, you could follow these seven steps:

1. Decide whether switching home insurance is the right choice

There are a number of reasons you might want to switch home insurance. You may decide to switch to bundle your auto and home policies with one insurer, expand your home insurance coverage with another carrier’s endorsements or find a carrier with more robust digital tools.

Another common reason to switch may be cost-related. A quote from a different provider for the same level of coverage could be significantly lower. However, most insurance professionals recommend carefully comparing quotes before you switch carriers. Another carrier’s lower quote may be due to lower coverage limits or reduced coverage types. Before you switch homeowners insurance companies, you might want to review your situation with a licensed insurance agent.

2. Compare ratings

Third-party ratings may help you decide if a company will meet your needs. For example, you could look at customer satisfaction ratings from J.D. Power and Complaint Indexes from the National Association of Insurance Commissioners (NAIC) to decide if a company’s level of service is equal to what you are looking for.

Financial strength ratings may be helpful metrics to consider as well. Companies like AM Best and Standard & Poor’s (S&P) assess the historical financial strength of insurance companies and assign each company a proprietary rating. These ratings might help you get a sense of a company’s historical ability to pay out claims.

3. Compare your current policy to the new policy

Before switching insurers, most home insurance professionals recommend reviewing your old policy and your potential new policy to make sure you understand what you are purchasing and what you are leaving behind. It may help to read through both quoted home insurance policies and look for the following:

• Check the policy limits: You may want to make sure you are aware of how the coverage limits change, especially since property insurers have their own way of calculating your dwelling coverage amount. This calculation will appear on your policy as your Coverage A amount and impact several other coverage limits on your policy.
• Look for exclusions: The terms and conditions may reveal exclusions or hazards not covered in the new policy. Most home insurers exclude flood and earthquake coverage in a standard homeowners insurance policy, but some insurers may have additional exclusions, such as exclusions for certain dog breeds.
• Check your endorsements: Endorsements are add-ons that increase or broaden your coverage. Not all companies offer the same endorsements, so you may want to be aware of how these riders differ between your quotes so you know if you’re losing or gaining coverage.
• Compare deductibles: The deductible is the amount of money you agree to pay if you file a claim; it’s essentially the portion of a loss that you are willing to assume. You could save money if your deductible is higher, but most insurance professionals recommend choosing a deductible you can afford to pay with little notice.
• Review your coverage type: There are several different types of home insurance policies, and each type differs in how your coverage is handled. Getting a quote for the same type of coverage may help you more accurately compare rates. For example, if you are comparing replacement cost coverage to actual cash value coverage, you may notice a price difference, but it’s really because the coverage type is different.

Remember that the best home insurance company for one person isn’t necessarily the best company for everyone. Needs vary, and working with a licensed agent might help you find the right fit for your situation.

4. Look at your current policy’s effective dates

It may be important to review your current policy’s homeowners insurance declarations page to find out when your coverage ends. If you cancel your old policy before coverage begins on the new one, you could end up with a lapse in coverage. Lapses can result in higher premiums. Even worse, if you suffer a loss while your coverage has lapsed, you will have to pay out of pocket. In addition, a mortgage company could purchase coverage on your behalf — called force-placed insurance — and pass the premium on to you in your monthly mortgage payment.

One of the most common questions when changing home insurance is, “Can you switch home insurance at any time?” The answer is yes; you can nearly always switch insurers at any time. If you have a mortgage with an escrow account, though, your prior policy is likely paid up for a full year. You’ll likely want to send any refund back to your escrow account to avoid any issues with your lender.

5. Buy the new policy

Once you know the newer quote works for you, it may be time to buy the new home insurance policy. You will be asked for an effective date for your new policy. You can set up your new policy to go into effect the same day as your current policy ends. However, most insurance professionals advise against canceling your current coverage before your new policy’s effective date. For example, if your current policy ends on June 30, you could set your new policy’s effective date to June 30. This prevents you from paying for duplicate coverage and from experiencing a lapse in coverage.

6. Notify your existing home insurance company

Once you have started or scheduled your new policy, it is likely time to contact your existing home insurer and cancel your current policy. You’ll need to provide the cancellation date and you might need to sign a form to authorize the cancellation.

If you cancel your policy on its renewal date, you likely won’t have a refund since all the premium was used up. If you cancel mid-term, though, you might get money back depending on how you pay. If you have an escrow account that pays your home insurance, it’s important to ask your mortgage lender how to send the refund back to the escrow. It’s technically yours to keep, but if you do not repay your escrow, your mortgage lender may not have sufficient funds to pay the new policy, which could result in an increase in your monthly mortgage payment to rebuild the escrow account.

7. Contact your lender

If you have a mortgage, you will likely need to keep your lender in the loop. If you pay for your homeowners insurance directly, you could call your lender to notify it you have switched insurance companies. You may need to email your mortgage company a copy of your new homeowners insurance declarations page.

If you have an escrow account with your lender and it pays for your homeowners insurance from the account, it may be important to notify the lender right away, so the lender then directs payments to the new insurance company. The lender should receive a cancellation notice from your prior insurer and a declaration page from the new insurer, but letting your mortgage company know directly about the change might help forestall any complications.

Frequently asked questions

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    Will I pay more if I switch home insurance companies?

    Typically, homeowners switch insurance companies in order to save money, but this isn’t always the case. If you’re switching companies to obtain a more robust policy or work with a company with better customer service or digital tools, you may be paying more as a result of the switch. Adding coverage types or expanding your coverage limits typically results in a higher premium, but this may not be the case if the new company has substantially lower rates or offers more applicable discounts. The best way to evaluate whether you will pay more with a new insurance company is likely to review your new quote carefully to see how the premium, coverage options, coverage limits, deductible and discounts stack up against your existing company.
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    What is the homeowners insurance declarations page?

    The homeowners insurance declarations page is the condensed version of your policy that includes your basic policy information. This typically includes your coverage limits, deductible amount, selected endorsements, policy effective and expiration dates, policy number, your name and address and the name and address of the insurance company. This information will also be explained in more detail if needed in the insurance policy.
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    Can I switch home insurance companies after a claim?

    Yes, but it’ll depend on the status of your home insurance claim. If your claim is still in an “open” status — meaning it isn’t fully resolved yet — you probably won’t be able to change companies. Once a claim is closed, you may be able to switch companies more easily, but keep in mind you won’t be able to “get rid” of your claim by going to a new company. Insurers run Comprehensive Loss Underwriting Exchange (CLUE) reports which give them access to your prior claim information. Regardless of what company you were with at the time of the damage, a claim may influence your new insurance premium or eligibility with another company.
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    How do I know if switching home insurance is a good idea?

    There are a lot of reasons you might want to switch your home insurance. You might find a lower price, better coverage, or an endorsement or discount you were looking for. You might even switch based on the service you receive from your insurer or for a feature like a mobile app. Whether or not it’s a good idea will depend entirely on your circumstances. If you aren’t sure if you should switch, it may help to talk to an independent insurance agent. These agents contract with multiple insurance companies and may help you evaluate your situation and shop for new coverage by obtaining multiple quotes.