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Home Insurance

How to Change Homeowners Insurance

Reviewing your homeowner’s policy around renewal time is a great way to ensure you’re paying a fair price for your coverages. If you feel that your prices are too high or that upgrading your limits would make your premium unaffordable, shopping around is an excellent option.

Your insurance needs change over time. What may have seemed affordable and appropriate in the past may not suit you now.

Perhaps you committed to paying high premiums as a first-time homeowner or had higher coverage limits because of a fire risk that has now been resolved. Whatever the scenario, your circumstances change how much you pay to protect your possessions and yourself. Review your insurance policy periodically to ensure you’re still covered in the right places to avoid paying more than you have to.

How to Change Homeowners Insurance

Insurance is essential to a homeowner’s financial well-being, but premiums can radically shift over time. The increases commonly go unnoticed because homeowners often pay their premiums and mortgage simultaneously. To ensure they are not overpaying, homeowners should review their policy annually to ensure they’re still happy with the price and coverage. If not, they can shop around to find the best rate and coverage options available in their area.

Review and Understand Your Current Policy 

The first step is to find and review the policy declarations page. The declarations page is roughly two pages and is at the beginning of your homeowner’s insurance policy. The document lists your name, the company’s name, the property address, the policy number, the chosen deductibles, the coverage amounts, the annual premium, and any endorsements attached to the policy. During the quoting process, the policyholder may select loss of use, liability, and medical coverage amounts.

You’ll notice that the declarations page lists the coverage categories. Beside each category is the dollar amount that would go towards repairing all damaged items within that category. The highest dollar amount goes towards repairing or replacing the dwelling. Coverage amounts for other structures and personal property are their own categories and are a percentage of the dwelling coverage.

Check the Terms and Conditions of Your Existing Policy

The policy terms go into even more detail about the coverages and the rules associated with each amount. In these sections, the company will lay out when and how they’ll resolve their customer’s claims.

Time Your Switch Well

A homeowner can change insurance companies at any time. However, an excellent time to switch is before your old policy expires and the new one is set to begin. Some insurance companies charge their policyholders an additional fee if they cancel before the policy has expired. 

However, keep in mind that changing before the policy has expired may cause issues with the escrow account for those who go through escrow for their homeowner’s insurance payments. Any policyholder thinking about switching should check with their current insurance company to learn about any fees associated with changing companies too soon.

Determine Your Coverage Needs 

Shopping for a new policy is the perfect time to reassess your insurance needs. While reviewing the current policy, note whether the policy covers personal property at replacement value or actual cash value under your existing policy. Review your personal property assessment and ensure it and your records are up to date. Also, ensure your dwelling limits, personal property limits, and other coverage limits would sufficiently replace your current items by estimating what they would cost to purchase new.

Gather the Information You Need To Get Quotes

Most insurance companies will ask similar questions when quoting for homeowners coverage. A few questions your agent may ask are:

  • What year was the home built?
  • How many square feet is the house?
  • Are any detached items on the property, like a pool or a shed?
  • When was the roof last replaced?
  • When were your home appliances last replaced?
  • Have you recently renovated your bathrooms or the kitchen?
  • Is the garage attached, detached, or built into the home?

Some of this information is available through online databases and is used for rating policies, while others are for discount purposes. It’s a good idea to be prepared for the agent to ask them as a precaution so have your answers ready.

Compare Different Home Insurance Companies

Insurance companies provide rates to their customers on a case-by-case basis. Companies rate customers based on where they live, their credit scores, the age of their homes, and various criteria. 

There are tools available to customers to rate their insurance companies. Websites like J.D. Power and the Better Business Bureau track and score companies based on customer complaints and how each company handles them. Agencies like AM Best track a company’s financial score and inform customers of the company’s financial stability. The higher a company’s score, the more likely the company will pay multiple claims at once, which is usually necessary after a natural disaster.

Make the Switch

Once you decide on a new policy, set the effective date for either ASAP or the day before the old policy expires. By having the policies overlap by a day, the homeowner can be confident that there won’t be any lapses in their coverage. 

Some insurance companies will require the homeowner to sign the new paperwork in their office. Others initiate the new policy over the phone and send the documents to be signed electronically. The insurance company will let the homeowner know what they need to make the policy active.

Cancel Your Old Policy

Once the new policy is in place, the homeowner can then call their old provider and ask them to cancel the policy. If the switch is happening before the end of the policy term, set the cancellation day for the day after the new policy starts. Some insurance companies require requests in writing, while others can cancel the policy over the phone. The insurance company should tell you what they’ll need to cancel the policy.

Those policyholders who have their escrow accounts pay for their policy and are canceling it before the end of the policy term should ask how the refund will be processed. Some insurance companies will send the homeowner a refund check for the unused premium. Others may send the refund check back to the escrow account that issued it. Either way, deposit the refund check into the escrow account so the account won’t end up short.

Inform Your Mortgage Company

Once the homeowner signs the new paperwork, reach out to the mortgage company and tell them that you’re switching insurance companies. The insurance company typically reaches out to the policyholder’s lender to inform them that the homeowner has changed insurance companies. 

After speaking with the new insurance provider, the lender will call the homeowner to verify the new policy. Some lenders require the most recent declarations page from the homeowner. You can send them the new insurance company’s documents after signing up for the new policy.  

What Are the Most Common Reasons for Changing Coverage?

Homeowners can and should switch home insurance companies whenever they feel their current company isn’t meeting their needs. Shopping around is also good to ensure your pricing is still competitive. Reviewing your policy about a month before your policy renews is the best gauge of whether you’re paying a fair price for your coverages. That time frame also gives the homeowner the best opportunity to find a more suitable company if their current policy or company isn’t meeting expectations. 

A long claims history, poor credit score, or risky location could result in a customer paying more for their coverage. However, another company might not rate the same criteria in the same. The following are some additional reasons a homeowner might shop around at renewal time.

To Get a Better Price

It’s no surprise that insurance rates increase over time. Filing a claim, reporting an updated kitchen, and other changes to your policy can increase your premiums by up to 10% for the next policy term. Some insurance companies even offer additional discounts as incentives for homeowners to switch insurance companies. Switching companies could put extra money into your pocket for the same or better coverage options.

To Meet a Change in Coverage Needs

A recently married homeowner now has double the personal property and requires the appropriate increase to their personal property limit. Reinvesting in the home by upgrading the bathrooms or the kitchen requires increasing dwelling coverage. A homeowner might also want to consider a company that offers a guaranteed rebuild clause to cover their home rebuild if the price of rebuild materials goes up.

To Bundle Coverage or Take Advantage of Other Discounts 

Homeowners that insure their car and home by two separate companies could miss out on 15%-20% savings for their combined policies. Bundling is also an opportunity to take advantage of promotional discounts designed to draw new home or auto policyholders. Insurance companies could give additional discounts based on where a customer lives or other information that could be considerable savings to those who switch.

To Find a Different Insurer 

Filing a claim can be stressful, mainly because a policyholder files them after a traumatic and stressful event or situation. The right insurer makes the claims process and customer service interaction as pleasant as possible.