Can You Change Homeowners Insurance? Your Definitive Guide to Switching Providers

Homeownership comes with a lot of joys. You’re building memories as well as equity. It also comes with a lot of responsibilities and expenses. There’s general upkeep and bigger-ticket items to budgets for, such as a new roof or HVAC system. Then there are natural emergencies you may have to contend with, such as fires, floods, or windstorms.

However, what’s covered under your homeowner’s insurance and what’s not may be written in the fine print. Perhaps you recently discovered your homeowner’s insurance doesn’t cover mold, and you live in an area prone to storms. Or, maybe you’ve made some home upgrades and wonder if you have enough insurance coverage.

Insurance can be complex, and you may want to know if switching insurance providers is in your best interest. After all, you don’t want to leave yourself underinsured or with a gap in your coverage.

To find out, we asked top insurance experts for their input. Below, they answer some of the most critical questions asked by homeowners to discover when you can change homeowners insurance providers and if it’s worthwhile to do so.

Where do I start?

If you’re thinking about changing insurance providers, you want to ensure you’re getting a better deal while maintaining the needed coverage. Is switching providers even the right choice for you? It could be if you:

• Are dissatisfied with your service
• Want to save money
• Want to bundle your policies for convenience

Stine Jackson, a South Bay Luxury Specialist with The Oldham Group, says it can be good to shop around insurance policies every year or two and see if switching will save you money. She recommends asking your real estate agent for recommendations.

“My recommendation is always to reach out to your Realtor® to see if they have a referral for an insurance broker. An insurance broker has access to insurance policies from different companies. They’ll be able to see all your options with the different rates and what they cover.”

Of course, you can also reach out to individual insurance companies to compare policies.

You’ll want to ensure you’re covered for anything that may happen and have adequate insurance to cover fires, floods, and other natural disasters if those are typical in your part of the country.

In some cases, you may save money by bundling your homeowner’s insurance with your auto policy, so that’s worth considering too.

How can I research insurance providers?

There’s no shortage of ways to check out insurance providers online. You can look through the Better Business Bureau, J.D. Power’s Customer Satisfaction Survey, and other independent ratings.

These rating companies look at trends and customer reviews to assess how happy people are with their insurance providers. They can be helpful, but since they’re not specific to your situation, they don’t give you all the information you may need to decide on your own homeowner’s policy.

Additionally, you can check out customer reviews (but take them with a grain of salt.) Again, you’re not privy to the specifics.

How do I compare policies?

Jackson recommends going through policies line by line and asking plenty of questions to make sure you understand everything.

In particular, you’ll want to compare:

Policy limits

Policy limits get into the nitty-gritty of insurance policies. According to the National Association of Insurance Commissioners (NAIC), your coverage can relate to your home, other structures on your property, liability, loss of property, and loss of use if your home is being repaired and you can’t live in it.

Nick Schrader, an insurance agent with Texas General Insurance, says, “People tend to overlook liability coverage, and sometimes it might not be enough. Some insurance companies restrict the amount of liability coverage; if that happens, you may want to take a chance on umbrella insurance for extra liability coverage. If you own a collection of recreational vehicles like ATVs, golf carts, snowmobiles, and the like, you might want to look for a policy that covers these valuables.”

Ask about the appropriate amount to insure your property. It’ll vary depending on your home, location, and other factors.

Exclusions

Many things could be excluded from your insurance policy. Everything from weather concerns like floods, earthquakes, and fires to squirrels nesting in your attic. 

Jackson says, “Exclusions are really important in terms of making sure you have a full understanding of what your policy covers. One of the most relevant exclusions we’re seeing today is a short-term rental. There are a lot of companies that will not provide home insurance for a short-term rental company or people who intend to use their property as a short-term rental. So make sure you’re open and honest with your insurance agent about your intended use.”

Deductibles

A deductible is the amount of money you and the insurance company have agreed you’re responsible for paying. So if you have a $1000 deductible and file a $10,000 claim, your insurance company will cut your check for $9000.

Jackson says, “The higher your deductible, the lower your annual premium.” So if you’re willing to gamble in the long term and you want to keep your monthly payment down, then a higher deductible may be a good option. Or, if you don’t feel comfortable that you’ll have a larger chunk of change for a potential repair, then you’re best to go with a slightly lower deductible.

Cash value and replacement value

In essence, replacement value is what it would cost to rebuild the home. Cash value is what you would sell your home for. Of course, it can quickly get more complicated than that. If you opt for replacement costs and your home is damaged, the insurance would cover the replacement cost at the current price.

Cash value is related to what you could sell the item for right now or the replacement cost minus depreciation. Your insurance provider can explain these to you as they relate to your specific needs.

What do I need when changing homeowners insurance?

As you can imagine, you’ll need proof of your new insurance policy before you cancel the old one. Jackson says, “They’ll want to know who’s servicing your loan. You’ll need your paperwork.”

One thing to keep in mind is that you don’t want a gap in your coverage. So make sure your new policy is in place before you cancel your old one, and for caution’s sake, you can have them overlap a day or two. That way, you won’t risk a lapse in coverage.

Your insurance policy will have something called a homeowner’s declaration page with policy dates, coverage info, and the name and address of the insured location.

Once you have your new policy lined up and confirmed, you can cancel your old insurance. You’ll receive an email confirmation with official documentation for your records.

When should I switch?

You can switch your policy any time though Schrader says, “Standard homeowners policies normally last for a year, and you are expected to receive a renewal notice before it expires.”

Jackson says it makes sense to review your homeowners policy every year or two. You can put a note on your calendar to confirm your current policy’s effective dates and start shopping around a few weeks earlier so you have time to make the switch. Again, you don’t want your coverage to lapse.

Be aware of penalties or cancellation fees

If you’re canceling your insurance before it ends, there could be penalties or cancellation fees. Your insurance policy should clearly identify any penalties, and you can ask your provider for clarification. Then you can assess if it’s worth it to cancel or if you’re better off waiting a few months when your policy expires.

Be sure to buy your new policy before canceling the old policy

Once you’ve decided on your new policy, you can cancel your old one. As noted above, you don’t want a gap in your insurance coverage, so make sure you know when your old one ends, and your new one begins. That way, you can build in a day or two of overlap.

Who do I need to contact?

Once you have your new insurance policy, you’ll want to notify your existing insurance carrier to cancel your insurance. If you have an automatic withdrawal set up, you don’t want to continue paying for something you’re not using!

An independent insurance agent at World Insurance in New Jersey, Seth Hirschhorn, says, “I always advise binding your new coverage and policy first. Then, once your new policy is effective, you’re able to contact your ‘old’ company or agent and request the cancellation of those policies.”

“Binding” means you have coverage, yet you don’t have the policy yet. For example, if you agree to a new policy over the phone, you’ve committed to it, so it’s “binding.”

You’ll also want to notify your lender (if you have a mortgage) that you’ve switched insurance providers. The reason is twofold. First, most lenders require you to have homeowner’s insurance, and second, if you have an escrow account, they’ll need to send payments to the new insurance company.

An escrow account is where your mortgage lender puts a portion of your monthly payment. It’s earmarked for property taxes and insurance. You don’t want them paying your old insurance provider instead of your new one!

What if I already paid my policy for the year?

If you’ve already paid your annual premium, you can still change insurance providers and request a refund. When you call to cancel your insurance, ask about the refund policy. They’ll likely prorate it, and depending on your payment arrangements. They may issue the check to your new provider or to you directly, so be sure to ask.

As you can see, you can change your homeowner’s insurance. If you haven’t looked at yours in a while, it could be a good thing to shop around and see if you’re getting the best coverage for your money. Research your options and identify if it’s worth it.

Header Image Source: (John Fornander/Unsplash)