How Do I Switch Home Insurers?

How Do I Switch Home Insurers?

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Switching to a different home insurance company could save you hundreds of dollars each year, and it could also help you make sure you're getting the right level of protection for your needs. Finding a new insurer takes a bit of effort and timing on your part, but it can absolutely be worth the work.

How to switch home insurers

Step 1: Learn about your current insurance plan

In order to decide whether it's worth it to switch insurers, you have to know about your current coverage — and what it costs. Check with your current insurance company to find the following:

  • Monthly premium
  • What coverages you have
  • Policy renewal date
  • Cancellation fee for canceling early, if any

Some home insurance companies charge you a flat fee or portion of your remaining annual premium to cancel before your policy expires at the end of a year. Determine whether you'll save money by waiting until your policy renews or switching immediately, but know that your home insurance price is not likely to change much over the course of a few months. It's up to you whether to pay the early cancellation fee or wait until the end of the year.

Step 2: Determine your coverage needs

If it's been a while since you bought home insurance, it's possible that your coverage needs have changed. Reassess how much insurance you need to adequately cover your home and your family.

You're especially likely to need to make coverage changes if you have made an addition to your house, you've made a significant number of purchases recently or if the size of your family has changed.

Step 3: Get quotes, including from your current insurer, and buy coverage

The next step is to get several insurance quotes, including from the company you're currently using. We recommend getting prices from at least five different companies to be sure you get your best rate.

Make sure to include your current insurer, too. It's possible that your new insurance needs will make an impact on what you're paying, so check with it to see if your rates have gone down.

Step 4: Buy a new policy and let your lender know

Once you've found the best home insurance company for you, buy a policy. If you're just letting your old policy expire without renewing, make sure your new policy starts before then.

If you have a mortgage, reach out to your lender to let it know you've switched home insurance companies; your mortgage lender likely requires insurance, so if you skip this, the company may think you let your insurance lapse.

Step 5: Cancel your old policy

Once your new policy has gone into effect, you can safely cancel your old policy. If you're ending it in the middle of the year, ask about what you need to do to get a refund for the leftover premium you've already paid.

Switching home insurers with an escrow account

Some homeowners pay their mortgage payments, property taxes and home insurance out of a single account, called an escrow account, which is managed by their home lender. These are especially common for homeowners who have paid less than 20% of the down payment of their home.

If your home insurance is paid out of an escrow account, you'll need to reach out to your lender before buying a new home insurance policy — since your lender will pay your home insurance premium, instead of you doing it directly. It's extra important to reach out to your lender if you have a renewal coming up, since it may automatically renew your policy 30 to 60 days before the actual date.

When to consider switching home insurance companies

You can switch home insurance companies at any time, not just at the end of your policy. You should consider switching home insurers if you find a better price for coverage, or if your current company is no longer meeting your needs.

However, you're more likely to find a better offer on home insurance if you've experienced a life change that will impact how your rates are calculated. While every insurance company calculates prices differently, they all use similar information like your age, the location and value of your house, and your claim history to determine how much to charge.

It's worth looking into changing home insurance providers if you've experienced any of the following changes since you bought your current home insurance policy:

  • You moved
  • You expanded or improved your house (such as a new roof)
  • You bought a car (check out bundle discounts!)
  • The number of people in your household changed (such as a marriage, new baby, move for college, divorce)
  • Your credit score improved
  • You got a pet
  • You added a security system or features
  • Your current insurance rates went up

Some of these changes might also affect your coverage needs. For example, adding onto your home will likely increase the rebuild cost of your property, meaning you'd want to increase the amount of dwelling coverage you have on your home to match.

The most convenient time to switch home insurers is around the time your current policy expires (usually annually), as you won't have to worry about getting a refund or the possibility of paying cancellation fees. If you're really committed to saving on home insurance, it can be a good idea to get a few quotes every year before renewal—just to make sure you're not overpaying.

When not to switch home insurance companies

It's never a bad idea to get a quote to see if you could save money on home insurance, but there are times when the hassle of making a switch may not be worth it.

The most common scenario is if your insurer charges you a cancellation fee or keeps a portion of the premium you've prepaid. This is usually only an issue if you're canceling your policy midyear. You'll need to check the details of your policy or payment terms to be sure of the amount, as it'll depend on your policy. Weigh that amount against what you'd save by switching, and decide whether to wait until the end of the year to switch.

The good news is that home insurance rates don't change drastically over time. If you've found a company that's offering you a lower rate now, chances are they'll offer you a lower rate in six months, too.

The other time it may not be worth it to switch home insurers is while you're in the process of making a claim. To be clear, you're absolutely allowed to switch insurers during this time, and your insurance company will still pay out the claim if you cancel coverage. However, it does create more work for you during an already stressful time—especially if the claim process is drawn out. Coordinating with claims adjusters and repair staff may be more difficult if you're simultaneously working to cancel your policy. The hassle of dealing with two insurance companies at the same time may not be worth the savings you'd make over a few weeks.

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