How to switch home insurance companies
Don’t stick with a company you don’t love
It’s easy to forget about reviewing your home insurance — after you’re settled in a new home, life gets busy, and paying your bill becomes just another routine task.
However, if you haven’t evaluated your home insurance in a few years, it may be a good time to shop around and compare quotes. You may find a policy with more coverage or a lower premium than your current one.
Switching insurance companies isn’t too complicated — just make sure you get adequate coverage and activate the new policy before canceling with your old provider. A lapse in insurance coverage means you aren’t covered if something happens during that time.
Homeowners may switch insurance companies to lower their premiums, increase coverage or receive better customer service.
Jump to insightTo switch home insurance companies, review your current coverage, gather quotes, purchase your new policy, cancel the old one and notify your lender of the change.
Jump to insightYou can change home insurance providers whenever you want, but canceling before the policy term ends may result in a fee.
Jump to insightShould I change my homeowners insurance company?
One of the most common reasons homeowners switch insurance companies is to secure a lower premium.
“Insurers frequently reassess their risk models, which means a new policy with a different company can offer significant savings,” said John Crist, CEO and founder of Prestizia Capital Group.
However, not all policies offer the same amount of coverage, so you may want to consider a company that covers perils specific to your area, such as floods or earthquakes. Other products can add protection for high-value items or identity theft.
A company with poor customer service or that demonstrates an unwillingness to pay out legitimate claims can also be a reason to switch. However, sticking with your current provider may be the better option in some instances.
“If a homeowner has accrued loyalty discounts or benefits, like the claim-free rewards offered by some insurers, switching might mean losing these advantages,” Crist said. “Furthermore, changing insurers frequently can affect the trust factor; insurers often look favorably on long-term clients, potentially resulting in better premium rates in the long run.”
Steps to switching your home insurance company
If you do ultimately decide to change home insurance companies, there are a few necessary steps to help ensure you choose the right policy and switch seamlessly. Luckily, it’s a relatively simple process.
1. Evaluate your current policy
Before switching providers, you should review your current policy to determine if it offers the level of coverage you need. Here are some of the essential parts of your policy to evaluate:
- Dwelling coverage: Dwelling coverage protects the internal and external structure of your home if it is damaged or destroyed in a “covered peril,” or a covered event.
- Personal property coverage: This coverage pays to replace or repair your belongings if they are damaged or lost in a covered event.
- Liability coverage: If you’re liable for someone getting injured on your property, liability coverage can cover medical bills and legal expenses.
Look for any exclusions or limitations on your policy. You may want to extend your coverage for excluded perils, high-value items or detached structures on your property.
A common rule of thumb is to purchase enough coverage to completely rebuild your home, replace belongings and cover additional living expenses in the event of a total loss.
2. Gather documents needed for a new quote
When shopping for home insurance, you may have to provide the following information as you request quotes from insurance providers:
- Personal information (such as your name, address, Social Security number and contact information)
- Number of occupants
- The year the home was built
- Type of materials used in construction
- Any claims made in the past five years
- Details of recent renovations
- Security features, like fire alarms, deadbolts and security systems
- Additional coverage needs
3. Compare quotes and companies
Once you gather a few quotes, you can compare the different policies to find the best homeowners insurance companies.
While a cheaper premium may seem attractive, it could be disastrous if you lose your home and don’t have the proper coverage to replace it. Check each policy’s declarations page to evaluate the coverage amount, deductible, limits and exclusions.
If you have a mortgage, your lender may stipulate coverage for certain risks, so make sure the policy will satisfy the requirements.
You can compare each company’s customer satisfaction rating through sites such as J.D. Power and the National Association of Insurance Commissioners (NAIC). AM Best and S&P Global ratings can indicate an insurer’s financial strength and ability to pay out claims if a catastrophic event results in a widespread loss.
4. Purchase a new policy and cancel your old one
Once you decide which insurance company you’d like to go with, you can purchase your new policy. The provider will ask when you want the new policy to go into effect; make sure to give them the date your old policy ends to prevent a lapse in coverage.
You can then contact your current provider to let them know the date you’d like to cancel your old policy. If you cancel midpolicy, the provider will refund anything you’ve paid ahead of time (minus any cancellation fees).
5. Inform your lender of the change
Lastly, inform your lender you changed your home insurance policy. The lender may request a copy of the declarations page.
If applicable, redirect the premium refund to your escrow account. This ensures that your lender has enough funds to pay for your new policy and prevent a lapse in coverage.
How often can you change home insurance policies?
You can switch home insurance providers at any time, although you may incur a fee if you cancel before the end of your policy term.
There are a few specific instances that should prompt you to review your coverage (like if your premium increases). However, you should reevaluate at least once a year before your policy renews.
You should also revisit your policy if you’ve recently done any of the following:
- Made home improvements, like adding another bathroom, installing a pool or building a garage
- Upgraded the safety of your home (e.g., installed a burglar alarm, fire extinguishers or storm shutters)
- Experienced any changes to your lifestyle, such as starting a home business or adding or removing members of your household
FAQ
Is homeowners insurance required?
While it isn't illegal to go without homeowners insurance, it's almost always advisable to protect your home and belongings. If you have a mortgage, your lender will most likely require it.
Can you cancel your home insurance at any time?
Yes, you can cancel your home insurance whenever you’d like, but it's crucial to ensure you have a new policy in place to prevent a lapse in coverage. There may be a cancellation fee for terminating your insurance midpolicy.
Can I switch home insurance companies after a claim?
You can switch home insurance after filing a claim, but the old insurer will continue handling the claim until it's either settled or denied.
Bottom line
There are many reasons why homeowners might want to change their insurance providers. Switching insurers can make sense to save money on premiums, get better customer service or add more coverage.
If you want to switch home insurance companies, evaluate your current policy, research other providers and request quotes. When purchasing your new policy, make sure it goes into effect before you cancel your old coverage.
Article sources
- Consumer Financial Protection Bureau, “Consumer advisory: Take action when home insurance is cancelled or costs surge.” Accessed Sept. 23, 2024.