If you have a mortgage on your home, your lender almost certainly requires you to carry property insurance to help protect your investment in your home. But while your mortgage lender may require you to have a homeowners insurance policy, you don’t have to stay with the same company year after year. You have the option of changing your home insurance company, and doing so is usually a relatively easy process.
That said, you should know how to switch home insurance companies to avoid having a lapse or gap in insurance coverage. For most people, switching home insurance companies starts with shopping around, which is a great way to find out if you’re getting the best deal on your home insurance coverage. If you find that you’re not getting the best possible rate with your current carrier, switching carriers may be the right solution.
Reading: How to switch homeowners insurance
how to change home insurance
Changing homeowners insurers is a fairly simple process. To do so, follow these seven steps:
1. decide if changing home insurance is the right option
You may decide to switch to combine your auto and home policies with your auto insurer, expand your home insurance coverage with more exclusive options, or because you are dissatisfied with the level of service you have received from your current insurance provider .
Another common reason to switch may be related to cost. a quote from a different provider for the same level of coverage could be significantly lower. however, it is important that you take the time to review your quotes to ensure that you are comparing the same coverages and that you would not be missing out on coverage. Before you switch homeowners insurance, it’s crucial to do your research to make sure you’re making the right decision.
2. compare grades
To avoid disappointment with a home insurance company, it can be invaluable to research how others rate the company and how the insurer handles claims and complaints. If the quote passes the test, do some research on the new insurance company and how customers feel about it. you may want to see how the insurer responds and pays claims.
Take written reviews with a grain of salt: Many customers don’t review a company for doing a good job and only speak up after a problem. Some good sources for customer ratings include the Better Business Bureau and J.D. Power’s Customer Satisfaction Survey and Property Claims Satisfaction Study, which are independent studies based on what policyholders have to say about their property insurers.
You can also get an idea of an insurance company’s financial stability by looking at the best scores. The credit rating agency rates companies based on their financial strength. Businesses with high scores are more likely to pay a large number of claims at once, as is the case after a disaster like a hurricane or wildfire.
If you feel overwhelmed by the amount of resources and research required, bankrate simplifies the process by rating traders with a comprehensive weighted score based on reviews and ratings when reviewing:
- credit agencies: am best, s&p, moody’s
- customer experience and complaint studies: j.d. power, naïc
- average quoted rates: quadrant information services
- User Experience: Bankrate’s editorial team extensively researches an insurance company’s online and mobile resources.
- Check Policy Limits: Make sure you know how coverage limits change, especially since property insurers have their own way of calculating the amount of coverage on your living place. this calculation will appear on your policy as a coverage amount and will affect various other coverage limits on your policy.
- Look for exclusions: Terms and conditions may reveal exclusions or risks 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 breeds of dogs.
- Compare deductibles: The deductible could save you money if it’s higher, but make sure you can afford the larger out-of-pocket cost in the event of a claim.
- Check to see if policies have actual cash value or replacement value: It may be worth paying a little more for replacement value so you can buy new versions of damaged or lost property at instead of receiving a reduced and depreciated price.
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3. compare your current policy with the new policy
Before you switch insurers, make sure you understand what you’re buying and what you’re leaving behind. Read the fine print on both home insurance policies and be sure to compare apples to apples. to compare policies:
4. look at the effective dates of your current policy
Check the homeowners insurance declarations page of your current policy to find out when your coverage ends. if you time your switch wrong, you could end up with a gap in coverage. Insurance companies and mortgage lenders don’t like failures: You might miss out on an ongoing coverage discount with the new insurance company if you accidentally end up without homeowners insurance for a few days. Also, a mortgage company could buy coverage on your behalf if your insurance lapses, and the cost you’ll have to pay for premiums may not be competitive at all.
You can switch insurers at any time, but if you paid for your policy for the year, such as from your escrow account, then it may be less of a hassle to wait to switch your home insurance until about a month before your renewal. date. You can always cancel early and request a refund for the unused portion, but it may take a while to get that refund check.
5. buy the new policy
once you know the newest quote is right for you and you have an idea when your current homeowners policy ends, it’s time to act. You will be asked for an effective date for your new policy. You can set your new policy to be effective the same day your current policy ends. however, do not cancel your current coverage before the effective date of your new policy. For example, if your current policy ends June 30, you can set the effective date of your new policy to June 30. If you’ve decided to switch earlier, enter the date you want your new policy to take effect, then cancel your current coverage. for that same effective date.
6. notify your current home insurance company
once you have a homeowners insurance declarations page from the new insurer, it’s time to contact your existing homeowners insurer and let them know you want to cancel the policy.
You’ll need to call your current insurance company and say something like “I’d like to cancel my homeowners insurance policy as of” and give them a date. If your new policy is effective as of May 15, you can say that you would like to cancel your policy as of May 15. if asked, you can explain that you already have a new policy in effect as of that date. If the insurer accepts your cancellation over the phone, ask for a letter or email confirming the cancellation. you’ll need it to notify your mortgage lender.
If you pay for your home insurance directly and not through an escrow account, ask for details about any refund due on prepaid portions of the policy. If your premiums are automatically drawn each month, ask when the last draw will be made and how you will be reimbursed for the unused amount.
Some insurers may require you to cancel in writing. be sure to write down the email address or mailing address and the information you will need to include. write a letter or email with your name, policy number, address and contact information. indicate that you would like to cancel your homeowners insurance policy as of [date]. save the email sent for your records or send the letter with delivery tracking.
7. contact the lender
If you have a mortgage, you’ll need to keep your lender informed. one of the conditions of your mortgage is to keep your home insurance policy up to date. If you pay for your homeowners insurance outright, call your lender to notify them that you have changed insurance companies. you may need to email them a copy of your new homeowners insurance declarations page.
If you have an escrow account with your lender and they pay for your homeowners insurance from the account, it’s important to notify them right away, so the lender can direct the payments to the new insurance company.