However, mortgage lenders don’t insist you work with a specific company, or even stay with the same company throughout the length of your mortgage. And if you do stay with the same one, there’s a chance you’re not getting the best deal.
Luckily, switching homeowners insurance companies is a straightforward process. But is it worth it? How do you do it? And how do you find the right policy for your needs?
Read our guide to find out all you need to know about switching homeowners insurance companies.
Reasons To Switch Homeowners Insurance
Switching homeowners insurance companies is a fairly easy process that can be done at any time. However, you first need to decide if it’s the right decision for you.
Here are some of the top reasons to consider switching:
Get a better deal
It should come as no surprise that one of the main reasons people switch homeowners insurance companies is to get a better deal. Home insurance companies set premiums that can increase over time, so if you notice your premiums spiking, it may be a good time to switch companies.
Or, you might just find that another company offers a better rate than the one you’re currently on. Either way, switching can help you put aside extra money each month.
A change in coverage needs
If your life circumstances change, you should reassess your coverage needs to determine if it’s time to switch homeowners insurance companies. For example, if you’re getting married, you may want to increase your coverage to include any new valuables in your home. Or you may want to adjust your coverage if you get your home renovated.
Take advantage of discounts or bundle coverage
Bundling coverage is another great reason to switch homeowners insurance companies or update your policy. For example, you may find that a company allows you to bundle your homeowners and car insurance for a cheaper rate.
Discounts can also be another compelling reason to switch companies, which you can find at any time of the year.
Find a better company
Not all homeowners insurance companies are created equally. Even if you get good rates from your current company, you may find that their customer service team is difficult to deal with. Or maybe the company has a confusing claims filing process. Any stress you experience with your homeowners insurance company may be enough reason to switch.
How To Switch Homeowners Insurance Companies, Step by Step
Now that you know why you should switch homeowners insurance companies, let’s talk about how. Here are the steps you need to follow:
1. Review your existing policy
First, it’s a good idea to review your existing policy. Check out the declarations page to learn about the details of your coverage.
Knowing your deductibles, limits, inclusions, exclusions, and policy expiration date can help you make an informed decision about switching providers. If you currently have a mortgage, your lender may have certain insurance coverage requirements that your new policy needs to meet.
You’ll also need to check if your lender requires you to have specific types of coverage, like flood or earthquake coverage. As you evaluate your current policy, keep an eye out for gaps in coverage. Even if you’re trying to save money, you may find that you need more coverage instead of less.
2. Gather documents
Before you dive into getting homeowners insurance quotes, you need to gather specific information. To make the application process go smoothly, make sure you have these details on hand:
- Social security number and contact information
- Current and desired coverage amount and deductibles
- The year your home was built
- Your home’s square footage
- Your roof’s age
- Any safety features you’ve installed, including sprinklers
- Any information you have about renovations, such as a finished basement or a new roof
- Details about the features of your home, such as the type of HVAC system you have
Some of this information will help the insurance company determine the estimated costs to repair or rebuild your home. Other information, such as your home’s safety features, may help you qualify for discounts.
It’s also a good idea to have this information on hand if you’re considering bundling your homeowners and auto insurance.
3. Time your switch
While you can switch homeowners insurance companies at any time, it’s best to time your switch wisely. If you don’t switch at the right time, you may wind up with a gap in your coverage, or end up paying two companies simultaneously.
If you cancel early enough, some companies will offer you a refund for the unused portions of your annual premium. However, it’s best to check your current company’s policy before switching providers.
If you’ve already decided to switch companies, take some time to evaluate whether your new policy is worth the cancellation penalty.
4. Get quotes and look at company ratings
Your next step is to shop around for quotes from multiple insurers and compare company ratings. Insurance rates can vary drastically by company, so we recommend gathering quotes from at least three companies before making a decision.
You can work with a local agent, but the easiest way to gather quotes is using online comparison tools. Comparing quotes can help you save hundreds of dollars, but keep in mind that price isn’t everything. You still need to ensure the company you choose meets all of your coverage needs.
Additionally, it’s important to do some research into the companies you’re considering. Take a look at how other customers rate the carrier and how the carrier handles complaints and claims.
5. Compare the new policy to your current one
Before switching homeowners insurance companies, make sure you have a good understanding of what you’re getting and what you’re leaving behind.
Read the fine print on both policies and make sure to compare the following:
- Policy limits: Check how your coverage limits will change.
- Exclusions: Take a look at what exclusions or hazards aren’t covered in your new policy. Most policies exclude earthquake and flood insurance, but some insurers have additional exclusions. For example, some may not cover mold damage. Bear in mind also that while many policies cover legal expenses for dog bites, this may not apply to certain dangerous or aggressive dogs.
- Deductibles: If you go for a plan with a higher deductible and lower premiums, you could save money. But do make sure you can afford the total deductible in the event you need to file a claim.
You’ll also want to check if the new policy will pay you out in actual cash value or replacement value. If you opt for a policy with replacement value, you may end up paying a bit more, but it means you’ll be given enough money to buy new versions of your belongings in the event you need to file a claim.
With an actual cash value policy, you’ll receive a payout that’s calculated based on what the item was worth when you purchased it. So, if you need to replace a dishwasher that you purchased ten years ago, you’ll be given an amount based on what that dishwasher was worth ten years ago.
6. Purchase the new policy and cancel the old one
Once you’ve done a final comparison, it’s time to purchase your new policy and cancel the old one. You may be able to purchase your new policy directly after receiving your quote.
However, don’t cancel your current policy until you’ve purchased the new one. Additionally, make sure the date that your new policy goes into effect is on or before the date your current policy ends.
Again, you want to make sure there isn’t any lapse in coverage, as you won’t be covered if an issue occurs during this time period. If you paid your policy for the entire year, then it may be best to wait until your policy expires before you switch.
7. Notify your mortgage lender
After purchasing your new policy and canceling your old one, you’ll need to let your mortgage lender know that you’ve made a switch. Because most mortgage lenders require you to have homeowners insurance, you’ll definitely need to keep yours in the loop.
You may also need to email a copy of your homeowners insurance policy to your lender. If you have an escrow account set up with your mortgage lender, and they pay your insurance from your account, then it’s crucial to notify them right away so they can make payments to your new company.
As you can see, switching homeowners insurance companies is a pretty straightforward process. After you’ve decided it’s time to switch companies, you can gather all of your necessary documents and compare quotes.
Then, when you’ve found a company that suits you better, it’s time to cancel your old policy and purchase the new one, making sure to notify your mortgage lender.