Switching Home Insurance: A Simple Guide

Changing your house insurance is a straightforward process, but it's important to do it seamlessly to avoid any gaps in coverage. There are several reasons why people switch providers, including finding a better price, better service, special discounts, or better coverage. When changing your house insurance, you should first fill out an application for the new insurance policy and review your current policy to ensure you're not sacrificing coverage for price. Then, contact your current insurance company to inform them of your desired end date, and tell your mortgage lender and escrow account about the change. Finally, make sure your new policy starts on the same day your current policy ends.

Compare prices and coverage options

Comparing prices and coverage options is an essential step in changing house insurance. Here are some detailed tips to help you through the process:

Get Multiple Quotes

The first step in comparing prices and coverage is to obtain quotes from multiple insurance companies. You can do this by visiting a local home insurance agent, contacting insurers directly, or using an online marketplace that allows you to compare quotes from multiple providers at once. Getting multiple quotes ensures that you have a range of options to choose from and increases your chances of finding the best coverage at the most affordable price.

Understand the Quotes

When reviewing the quotes, consider factors beyond just the price. Pay attention to the coverage types and limits offered by each insurer. Remember that the cheapest quote might not always be the best option. Ensure that the quote provides sufficient coverage for your home, belongings, and potential liabilities.

Compare Deductibles

The cost of your deductible will impact your monthly payments. A lower deductible often results in higher monthly payments. When comparing quotes, consider the deductible amount and whether there are separate deductibles for specific perils, such as hurricanes or windstorms.

Evaluate Coverage Types and Limits

Home insurance policies typically include several types of coverage, such as dwelling coverage, personal property coverage, additional living expenses, personal liability, and medical payments. Evaluate the coverage limits offered by each insurer and consider whether they meet your needs. For example, dwelling coverage should ideally be enough to cover the cost of rebuilding your home from the ground up.

Assess Claim Settlement Options

When comparing policies, consider how claim settlements are determined. There are typically two options: actual cash value and replacement cost value. Actual cash value reimburses you for the value of your property minus depreciation, while replacement cost value provides reimbursement based on the current market value of the property. Replacement cost value is generally a better option as it results in larger payouts when you make a claim.

Research Insurance Companies

In addition to comparing prices and coverage, it is essential to research the insurance companies themselves. Consider their reputation, customer satisfaction ratings, financial strength, and ability to resolve claims in a timely manner. You can refer to ratings from organizations like J.D. Power, AM Best, and the National Association of Insurance Commissioners (NAIC) to assess the quality and reliability of the insurance company.

Look for Discounts and Perks

Many insurance companies offer discounts that can help lower your premiums. These may include discounts for bundling home and auto insurance, having a new roof, installing a home security system, or being claims-free. Additionally, look for any additional perks or coverage options that might be valuable to you, such as enhanced dwelling coverage or identity theft protection.

Apply for a new policy

To apply for a new home insurance policy, you will need to provide basic information about your home, such as its location, size, and the year it was built. You may also need to insure special items separately, such as jewellery, business equipment, or musical instruments.

It is important to compare different insurance providers and their policies to ensure you get the best coverage at the right price. Most carriers have online tools to estimate how much coverage would cost. It is recommended to compare quotes from at least three companies and consider their financial stability ratings, rates, complaint data, and reviews.

Once you have found a suitable policy, you will need to fill out an application and provide the necessary information. After getting back your rates, you can compare the coverage options to what is available on the market and what is included in your current policy. It is important to ensure that the new policy provides all the features you want and need.

Cancel your current policy

Cancelling your current home insurance policy is a straightforward process, but it's important to do it properly. Here's a step-by-step guide to help you cancel your current home insurance policy:

Step 1: Choose a cancellation date

Firstly, you need to decide on a cancellation date for your current policy. This date should coincide with the start date of your new policy to avoid any gaps in coverage. It's important to remember that your current policy may have a specific end date, so make sure to check the terms of your policy before choosing a cancellation date.

Step 2: Gather necessary documents

Before contacting your insurance provider, make sure you have all the necessary documents in place. This includes your current policy's declaration page, which contains important details such as your policy number and address. If you have a mortgage, you will also need to provide proof of new insurance to your lender.

Step 3: Contact your insurance provider

Once you have chosen a cancellation date and gathered the necessary documents, it's time to contact your insurance provider. You can usually do this by phone, but some companies may require a written request. Be prepared to provide your policy number, address, and cancellation date. If you are cancelling due to a move, you should also provide your new address for future correspondence.

Step 4: Complete any necessary forms

Your insurance provider may send you a form to complete to confirm the details of your cancellation. Make sure to fill out this form accurately and provide all the requested information. Some companies may charge a small processing fee for early cancellation, so be sure to ask about any potential fees.

Step 5: Confirm the cancellation

After submitting your cancellation request, be sure to follow up with your insurance provider to confirm that your policy has been cancelled. Ask for written confirmation of the cancellation and make sure to verify the effective date. This will ensure that there are no misunderstandings and that your policy is cancelled as per your request.

Step 6: Notify your mortgage lender

If you have a mortgage, it is important to inform your lender of the change in insurance. Mortgage lenders usually have a financial stake in the property and may need to be informed of the new insurance details. Failing to notify your lender may result in additional charges or complications.

Step 7: Expect a premium refund

If you have paid for your home insurance annually and cancel before the year is complete, you are typically entitled to a refund for the remaining period. Most insurance companies will calculate this refund on a prorated basis, refunding you a portion of your annual payment. Keep in mind that some companies may deduct a cancellation fee from your refund.

Notify your mortgage company

When changing your house insurance, it is important to notify your mortgage company. This is because your mortgage lender will require you to have homeowners insurance and will need to know about the change of carrier. If you don't inform your mortgage company, they may sign you up for an emergency coverage policy, which can be very costly.

If you have an escrow account with your lender, your monthly payments may include the payment for your home insurance premium. In this case, you will need to call your mortgage company to notify them of the change. They will need to know the name and address of your current and new insurance companies, your mortgage loan number, and your old and new policy numbers. They will also need to know that your new policy provides the coverage they require. You can also ask your mortgage company about their payment practices and whether they will send the check on your behalf.

If you have an escrow account, you will need to make sure there is enough in the account to cover the cost of the new insurance policy, especially if you are changing mid-term. If your escrow account falls short, your mortgage payments may increase. You may also receive a refund for your old policy, which you can redirect to your new escrow account to avoid an escrow shortage.

It is important to keep your mortgage company in the loop to ensure a smooth transition and to avoid any lapse in coverage, which could result in higher premiums.

Ensure continuous coverage

Ensuring continuous coverage is crucial when changing house insurance. Here are some detailed steps to help you achieve that:

Pick the right time to switch:

Although you can change your house insurance at any time, it is beneficial to consider the implications of doing so. Review your current policy to understand if there are any early cancellation fees or penalties for ending the policy before its renewal date. Some insurers charge a "short rate fee" if you cancel before the renewal date. Check with your current provider to see if there is any financial advantage to waiting until the renewal date to switch.

Compare your new and old policies:

Before making any changes, carefully compare the new policy with your current one to ensure you are not sacrificing coverage for a lower price. Review the coverage limits, exclusions, endorsements, deductibles, and coverage types to understand the differences and make an informed decision.

Choose an appropriate start date for the new policy:

When purchasing the new policy, select an effective date that aligns with the end date of your current policy. This ensures there is no lapse in coverage. Even a brief gap in coverage can result in higher premiums or leave you financially vulnerable in the event of a claim.

Notify your existing insurer:

Inform your current home insurance provider about your decision to switch. Provide them with the cancellation date, and don't forget to sign any necessary forms to authorise the cancellation. It is essential to follow their specific requirements for cancellation, which may include a written request or a phone call.

Keep your lender informed:

If you have a mortgage, it is crucial to notify your lender about the change in your insurance policy. Lenders often require home insurance and need to be updated to avoid complications. If your homeowners' insurance is paid through an escrow account, inform your lender to ensure they can redirect any refunds to your new escrow account, preventing an escrow shortage that could increase your mortgage payments.

Frequently asked questions