How to switch home insurance

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Whether you own a home or you’re moving to a new house, you may be considering switching your homeowners insurance company.

In some cases, sticking with your current home insurance can be beneficial. For example, if you’re a longtime customer and have received some discounts. But other times, switching to a new insurer may be the economical option.

Read on to learn more about why you may want to switch home insurers and how to do it.

How to switch homeowners insurance companies

Shopping around is always the best way to find your best deal. Here are the steps you should take to get the best coverage at the price:

Go carrier shopping: Compare, compare, compare again. Collect homeowners insurance quotes until you find a better deal that meets your requirements. Most carriers have online tools to see how much coverage would cost. You’ll need to provide basic information that applies to coverage, such as your location, the size of your home and the year it was built.

Apply for the insurance policy: You’ll need to provide basic information that applies to coverage, such as your location, the size of your home and the year it was built. Other special items may need to be insured separately. These include jewelry, business equipment or musical equipment. Double-check that the policy you’re applying for provides all the features you want.
Pick a date and activate the switch: When you’ve got the new insurance lined up, including a date that it will become active, you can cancel your existing home insurance policy.
Notify your mortgage company: If you carry a mortgage, your lender likely requires you to pay homeowners insurance and needs to know of the change to the new carrier. For those homeowners with an escrow account with the lender, monthly payments sometimes include the payment for the home insurance premium.

When you call your existing carrier and tell them you want to cancel. Give them an effective cancellation date. You can also issue a written request to cancel. In that case, email your current company that you’d like to cancel your policy, along with the effective cancellation date. Include your name, policy number, and address of the insured property.

“You should make sure you have the home insurance coverage you need from a new policy before you cancel an old one,” stressed Worters.

Pros of changing home insurance companies

It’s pretty easy to see the positives of swapping out your home insurance policy if you can find a better deal. Or you can get better coverage.

“There are not many cons when switching home insurance companies, other than any time spent investigating other companies and getting quotes,” said Espenschied.

Here are four other reasons that switching homeowners insurance might not be for you:

You’re already happy with your rates.
You like your current policy’s perks and you’d lose them with the new company.
You’re pleased with your insurer’s service and not sure about a new company.
You have bundled coverage and like the convenience of having everything with one company.

“Sometimes you want to change homeowners if the price is less than what you’re currently paying,” Worters said. “However, don’t go by price alone. Service is very important. Also, be aware there could be a penalty for canceling coverage. But if you’re saving a lot, it might be worth it. Check with your insurer first to see what the cost would be before you decide to switch.”

How to cancel your current homeowners policy

The first thing you need to do is decide when your new policy will kick in on coverage. Then, in writing, notify your current agency indicating the effective date you wish to cancel coverage, along with policy number. You likely will receive an electronic cancelation form via email so they will have it for their records.

Leave a couple of days of overlap with the new policy activated before the old policy is officially canceled. You don’t want to ever risk a coverage gap — even for a day.

When you make the switch, inquire about any refunds coming your way by canceling early.

“Contact your insurance agent and tell them that you want to cancel your homeowners policy,” Worters reiterated. “Usually, a notice in writing is required. The letter should include your name, address, policy number, your desire to cancel and your cancellation date. This is very important because you want to make sure you don’t have a gap with your new coverage taking over. Also, you want to make sure the insurance company refunds any money left on the policy; this is prorated.”

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Why would you want to change home insurers?

Breaking up is never easy. Common factors that might inspire you to look around are:

Price
New home
Better discounts
Better service
Coverage

“There are myriad reasons [to change your homeowners insurance],” said Loretta Worters, vice president of media relations at the Insurance Information Institute. “Could be price, coverage changes, if you’ve moved to an area where the company doesn’t write coverage.”

Many factors go into determining your homeowners insurance rate. Location is the biggest.

If you’re in an area prone to storms, tornadoes, hurricanes and earthquakes, your rate will be higher. Florida and Louisiana have the highest average rates.

“Home insurance rates will vary greatly depending on your state, and historical claim lossesloses,” said John Espenschied, owner, Insurance Brokers Group. “Even in large states, such as California, home insurance premiums can vary depending on if you are near a large national forest in northern California or down south in Orange County with a considerably less chance of forest fires.”

Can you switch homeowners insurance at any time?

Yes, you can switch your homeowners insurance at any time. Depending on your insurer and policy, you may have to pay a cancellation fee for dropping coverage before the end of the policy term.

How often can you change homeowners insurance?

How often you can change homeowners insurance depends on your specific circumstances and the terms of your current policy. In general, you can switch homeowners insurance companies at any time. Many homeowners insurance policies have an annual term, which means they are typically up for renewal annually. You can choose to change your insurance provider or policy at the time of renewal.

Do’s and don’ts of switching insurers

Here’s what to do and what not to do when switching home insurance companies:

Do’s

Look beyond cost.
Shop around.
Research the new company.
Let your soon-to-be old insurer know you want to cancel your policy; don’t assume they will cancel it for you.
Make sure you compare coverage when shopping around, so you’re not getting a cheaper policy just because it covers less.
Inform your mortgage company of the change if you switch.

Don’ts

Cancel your current policy before a new one is active.
Change to an unknown company until you do your research.
Be afraid to make a jump to a new company if it proves to be a good fit for you.
Worry about losing a bundle if the new company has a lower base rate or other discounts that make it cheaper for you.

How to shop for a new homeowners insurance policy

You should compare quotes from at least three companies before making a decision. Compare even more if you’ve got the time and want to feel more confident about that decision. Take a good hard look at financial stability ratings, rates in general, complaint data and reviews. In the end, you’re making an educated guess.

Don’t skip the homework part of your search. If the company you’ve found with cheaper rates doesn’t necessarily have a “gold star” in ratings or isn’t financially stable, is it really worth saving a few bucks?

You can compare homeowners insurance companies by searching on the National Association of Insurance Commissioners for consumer complaints, licenses and financial strength. Also, check Insure.com’s Best Homeowners Insurance Companies.

“Whatever you are most comfortable with shopping,” said Worters. “Like anything else, depending on the person, shopping online is a preferred method, while others like face-to-face contact with the insurance agent or company representative.”

It’s extra helpful to have your current policy in front of you while you’re making all of these comparisons. Then, you’ve got a line-by-line reference and not just an overview in your head.

Also, before moving on, ask your current insurer if they can give you a new rate or offer any discounts you may have overlooked or had not been available before.

Shivani Gite

Contributing Writer

Shivani Gite is a personal finance and insurance writer with a degree in journalism and mass communication. She is passionate about making insurance topics easy to understand for people and helping them make better financial decisions.