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Home insurance is a vital part of your overall financial plan, but what happens when your needs change? Are you able to switch home insurance companies? Thankfully, the answer is yes, changing homeowners insurance carriers is possible, so if your needs change, your insurer can change too. However, because home insurance is required by mortgage companies, you should 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 to a new company. We can show you the steps to follow to help you change carriers as easily as possible.
How to switch home insurance
Switching home insurers is a fairly simple process. To do so, 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 more unique options or find a carrier that provides a higher level of service.
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, it is important that you take your time to review your quotes to make sure you are comparing the home quotes correctly; you want to make sure you aren’t losing any valuable coverage. Before you switch homeowners insurance, you might want to review your situation with a licensed 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 can 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 past financial situation, which might help you choose a carrier that is financially strong and able to pay claims.
3. Compare your current policy to the new policy
Before switching insurers, make sure you understand what you are purchasing and what you are leaving behind. Read the fine print on both quoted home insurance policies and make sure you are comparing the quotes correctly. To compare policies:
- Check the policy limits: 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 should 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 make sure you can afford the larger cash outlay in case of a claim.
- 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 could help you more accurately compare prices. 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 could help you find the right fit for your situation.
4. Look at your current policy’s effective dates
Review your current policy’s homeowners insurance declarations page to find out when your coverage ends. If you time your switch wrong, 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 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’s 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, you should not cancel 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. If you have decided to switch sooner, enter the date you would like your new policy to take effect and then cancel your current coverage for that same effective date.
6. Notify your existing home insurance company
Once you have started your new policy, it is 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 the lender
If you have a mortgage, you will need to keep your lender in the loop. If you pay for your homeowners insurance directly, 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 is 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
The homeowners insurance declarations page is the condensed version of your policy that includes your basic policy information. This 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.
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.
There are a lot of reasons 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, talk to an independent agent. These agents contract with multiple insurance companies and can help you evaluate your situation and help you shop for new coverage by obtaining multiple quotes.