If you insure your home with the same company for several years or more, you may receive a discount of up to 10 percent. Still, you could have valid reasons for wanting to switch homeowners insurance companies when your policy is up for renewal or at some point mid-year. Don’t be afraid to change your coverage. “You really can switch at any time if you feel the need to,” says Dave Phillips, a spokesman for State Farm. If you follow these steps when switching your homeowners insurance, it should be easy and you should have the coverage you want at the price you need.
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Why switch home insurance companies?
There are several reasons to break up with your homeowners insurance carrier, including these four common issues:
- Price. You shopped around and found a better home insurance price, even with loyalty or other discounts with your current insurer.
- Bundle. You’re switching auto insurance companies and want to take advantage of rates associated with bundling your auto and home insurance.
- Service. You weren’t satisfied with the service you received when you made an insurance claim.
- Coverage. You want additional insurance, such as sinkhole coverage, or less restrictive coverage that your current carrier doesn’t offer in your area.
Before you switch and cancel your homeowners policy, be sure you understand factors that affect your insurance rates and do what you can to place yourself in the best position.
If you decide to change your home insurance, follow these four steps:
How to switch homeowners insurance companies
1. Shop for a new carrier. Compare home insurance quotes and find a carrier that can offer you a better deal while meeting all your insurance needs. Keep in mind that your home is likely your biggest and most valuable (material) possession and you want to keep it (and all your belongings) protected should disaster strike.
You can shop online or speak directly to a licensed insurance agent at Insurance.com by calling 1-855-430-7750.
Homeowners insurance offerings may vary depending on where you live. “There are some insurance companies that don’t take in new business in certain states or geographic locations,” Phillips notes.
2. Apply for new insurance. You may be able to fill out an application with the new carrier online or over the phone with your agent. You will need to provide some basic information such as the location and size of your home and the year it was built.
Do you have any special items that you need to insure separately such as jewelry or business equipment? Those items should be listed in your application. Before you commit and purchase new coverage, make sure the policy you are applying for has all the features you want and deductibles you can manage.
3. Make the switch effective. Once you know you will be able to obtain new insurance and the date the new policy will be effective, you need to cancel your existing homeowners insurance policy. To switch homeowners insurance companies, call your existing carrier when you’re ready and say, “I would like to cancel my policy as of [date].”
Another way to cancel is to send in a written request. You should be able to email it to your home insurance carrier if you don’t want to spend a stamp to send it out. With a letter or email, you have a documented trail of your cancellation request. You should include in the letter or message:
- Your name
- Your policy number
- Address of the home that is insured
- Your contact information
- A basic statement that says “I would like to cancel my policy” and the date you want to cancellation to be effective.
- List an address to send any refund
If you’re uncomfortable calling or writing your existing carrier to cancel, you have another option, according to Phillips: Let your new carrier do it for you. “Your new carrier can handle what can be an awkward process if you prefer not to initiate it with the carrier you already have,” he says.
4. Notify your mortgage company. If you own your home outright, this step isn’t necessary. But if you have a mortgage on your home, your lender is likely to require you to pay your homeowners insurance (and real estate taxes). “Your lender has a stake in this and can require that you have homeowners insurance,” Phillips says. Talk to your lender.
For homeowners who have an escrow account set up with their lender, monthly mortgage payments include money toward a homeowners insurance premium. When the premium is due, your lender forwards the full amount to the insurance carrier you have chosen. You must inform your mortgage company so it sends the check on your behalf to the correct company. Some lenders will allow you to tell them about the switch over the phone or by email. Others require that you put the information in writing. If a letter is necessary, ask for the address where you should send it. Here’s the information our mortgage lender will need to switch your homeowners insurance payments to your new company:
- Name and address of your current company
- Name and address of the new company
- Your mortgage loan number
- Your old and new homeowners policy numbers
If have a mortgage, but pay your own homeowners insurance bill, you still need to inform your mortgage company of the switch. If your mortgage insurance company isn’t informed of your new coverage immediately, but learns that your old policy is being cancelled, it may try to get its own coverage on your home. Forced insurance of this type is very expensive, so keep your mortgage insurance company informed of any change, as you make it.
One word of caution: Don’t leave yourself without coverage — even for one day. “You don’t want to be in a situation where your current policy ends at midnight on the 15th of the month and your new policy doesn’t start until 12 a.m. the 17th of the month,” Phillips says. “The 16th will be a day when you have a claim and you have no homeowners insurance.”
Switch home insurance carriers: manage payments
Your new company may want payment immediately and might not start coverage until it receives a check. Keep the effective date in mind when telling your current carrier when to cancel your homeowners insurance policy. Your mortgage lender may be able to send the check on your behalf, using money from your escrow account. Be sure to clarify with your lender what its payment practice is and whether or not it will send the check for you.
Be sure to ask about any refunds you may be due from your current (soon to be former) carrier. For example: An annual homeowners policy might cost $1,200. Every month, $100 of your mortgage payment might go toward your homeowners insurance premium. Your lender may have paid the full $1,200 in January, but if you switch insurance companies in June, you’re due a $600 refund.
Your insurance company may send the money to your mortgage lender or to you. If you get the money directly, your lender may ask for it. Find out where to send the payment if you to forward it and keep your escrow account in good standing.
Switching homeowners insurance can pay off
Evaluate your insurance carrier annually, regardless of whether or not you want to switch insurance companies, Phillips advises. “You should have a review every year just to be certain everything is properly insured and properly discounted. Things change.” Your review may lead you to shop around for better rates and coverage.
The easiest time to shop and change homeowners insurance policies is when your current policy term is coming to an end. However, you can shop anytime and if you find a better deal, and you’re satisfied the new company is trustworthy, go for it. It’s not that hard to switch and cancel your home insurance and it’s money in your bank not the insurance company’s.
Discover more ways to save by reviewing tips on buying homeowners insurance.