Insurance Due Date: Homeowner's Guide

Home insurance is typically billed annually, so your house insurance is due once a year. However, you can pay monthly if you prefer. You can cancel your home insurance at any time, but you may have to pay a cancellation fee. It's also worth noting that if you've had the same provider for a number of years, you may be paying more than you would if you switched to a new firm.

How to cancel your house insurance policy

Cancelling your house insurance policy is a relatively simple process, but it can be risky or costly if not done properly. Here is a step-by-step guide on how to cancel your house insurance policy:

Choose a cancellation date:

The main factors to consider when deciding on a cancellation date are your insurance company's cancellation fee and ensuring that your current policy's end date coincides with the start date of your new policy. If you are selling your home, you need to keep your insurance in place until the transaction officially closes.

Gather necessary documents:

Before contacting your insurance provider, it is important to have the necessary documents in place. These typically include 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.

Contact your insurance provider:

You can usually cancel your house insurance policy by phone or email. When contacting your insurance company, they may ask you to fill out a brief cancellation form specifying the details of your cancellation. They will also inform you of any cancellation fees or charges that may apply.

Notify your mortgage lender:

Mortgage lenders are typically listed as a loss payee on house insurance policies since they have a financial stake in the property. It is important to inform your lender of the change in insurance to avoid any issues. This is especially crucial if your insurance is paid through an escrow account, as your lender will need to instruct the escrow company to stop making payments to your old insurer.

Look out for your premium refund:

If you have paid for the year upfront and cancel your policy before the year is complete, you are typically entitled to a refund. The refund amount is usually calculated on a prorated basis, depending on the number of days left on the policy. However, the insurance company may deduct any cancellation fees or charges from your refund.

Avoid common pitfalls:

It is important to note that cancelling your house insurance policy may result in a cancellation fee, especially if you cancel within the first two months of your policy. Additionally, do not cancel the direct debit for your insurance with your bank without first informing your insurance company, as this may result in the policy remaining active, leading to potential payment issues and withheld documents.

Remember to carefully review your current policy and consider the financial implications before cancelling. It is always a good idea to have another policy lined up to ensure continuous coverage for your home.

What to do if your insurance provider won't renew your policy

It can be concerning when your insurance provider won't renew your policy. Understanding why this happens and the potential implications can help you navigate this situation.

Insurance providers take a view of the risk that you or your property poses. If they feel the risk is too great, they may decline to quote for your cover. Some of the biggest risks from an insurer's perspective include:

• An extensive claims history
• Disclosure issues
• A change in your personal circumstances
• The insurance provider no longer offers a particular type of cover

This depends on why your insurance provider plans to cancel your insurance. In some cases, you may be able to negotiate with them and make the necessary changes to meet their requirements for renewal. However, this isn't always possible.

If your current insurance provider still declines to renew your policy, you can try finding a new insurance provider. Different providers have different underwriting guidelines, and some even offer specialist insurance that may be better suited to your circumstances. Comparing quotes from various providers can help you find a suitable alternative.

Having a policy renewal refused by your current insurance provider can make it tricky to find a new policy with another provider. The impact depends on the reason for the refusal and your personal circumstances. It is generally recommended to be upfront about any previous refusals when applying for a new policy. Insurance providers share information about policies and claims histories on a database called CUE (Claims and Underwriting Exchange).

If you pay for your insurance monthly, ensure that all your payments are made in full and on time. Additionally, be accurate and honest in your insurance applications to avoid disclosure issues.

What home insurance covers

Home insurance provides financial protection against loss due to disasters, theft, and accidents. Most standard policies include four essential types of coverage: coverage for the structure of your home, your personal belongings, liability protection, and additional living expenses (ALE).

Coverage for the Structure of Your Home

Home insurance covers the cost to repair or rebuild your home after a covered event, such as fire, hurricane, vandalism, or theft. It also covers detached structures, such as a garage, shed, fence, or gazebo, usually for about 10% of the amount of insurance on the main structure. It's important to purchase enough coverage to rebuild your home in case of damage or destruction.

Coverage for Your Personal Belongings

Your furniture, clothes, sports equipment, and other personal items are covered if they are stolen or destroyed by fire, hurricane, or other insured disasters. The coverage is generally 50% to 70% of the insurance on the structure of the house. Personal belongings coverage also includes items stored off-premises, providing coverage anywhere in the world. Expensive items like jewelry, art, and collectibles are covered but may have dollar limits, so additional coverage may be needed for full value protection.

Liability Protection

Liability coverage protects you against lawsuits for bodily injury or property damage caused by you, your family members, or your pets. It covers the cost of defending you in court and any court-awarded damages, up to the limit stated in your policy. Liability limits generally start at about $100,000, but it's advisable to discuss higher levels of protection with your insurance provider.

Additional Living Expenses (ALE)

ALE covers the additional costs of living away from home if your home becomes uninhabitable due to damage from an insured disaster. It pays for hotel bills, restaurant meals, and other expenses above your usual living costs while your home is being rebuilt. ALE coverage has limits and may include a time restriction, but these are separate from the amount available to rebuild or repair your home.

How to get cheaper home insurance

Home insurance is an important financial safety net, but it can be expensive. Here are some tips to help you get cheaper home insurance:

Shop around

Don't buy the first policy you come across. Compare rates from at least three companies to find the most affordable option for your needs.

Insure your home for the proper amount

Insure your home for the amount it would cost to rebuild, not its current market value. Have your home insurance agent or company estimate your home's replacement cost so you can insure it for the correct amount.

Increase your deductible

You can lower your premium by choosing a higher deductible. Just make sure you have enough cash to cover the deductible amount should you need to file a claim.

Avoid filing small claims

Most home insurance companies offer a discount for customers who haven't filed a claim in the past three to five years. If possible, avoid rate hikes by paying for minor repairs yourself and only filing a claim when absolutely necessary.

Bundle your policies

Many carriers offer a discount if you bundle your home and auto insurance policies.

Add safety features to your home

Making your home safer may reduce your home insurance costs. Many insurance companies offer discounts for features that protect your home against fire and theft, such as fire extinguishers, deadbolts, and security systems.

Improve your credit

In most states, poor credit generally leads to higher insurance costs. While it's not a quick fix, you can improve your credit by making payments on time and keeping your credit card usage below 10% of your total credit limit.

Seek out other discounts

Companies offer various types of discounts, but they differ by company and state. For example, retirees may be eligible for discounts at some companies because they tend to be at home more and are therefore less likely to be burglarised or to suffer fire damage.

Review your policy regularly

Review the limits in your policy and the value of your possessions at least once a year. You want your policy to cover any major purchases or additions to your home, but you don't want to over-insure and pay for coverage you don't need.

Look for private insurance

If you live in a high-risk area and have been buying your homeowners insurance through a government plan, consider switching to a private insurance company. You may be able to find cheaper coverage, especially if you take steps to reduce your risk profile (e.g., by installing storm shutters or reinforcing your roof).

Choose your home wisely

When buying a home, consider its insurance costs. You may pay less for insurance if you buy a house that is close to a fire hydrant or in a community with a professional fire department. A newer home with modern electrical, heating, and plumbing systems may also be cheaper to insure. The type of home you buy can also make a difference: if you live in an earthquake-prone area, for example, a wooden frame house is more likely to withstand this type of disaster than a brick home.

Check the CLUE report

When buying a home, check the CLUE (Comprehensive Loss Underwriting Exchange) report, which contains the insurance claim history of the property. This can help you anticipate potential problems and insurance costs.

Remember what's not covered

Standard homeowners insurance does not cover flood or earthquake damage. If you live in an area prone to these disasters, you'll need to purchase separate policies for flood insurance and earthquake coverage.

Choose the right insurer

When choosing an insurer, don't consider price alone. The insurer you select should offer a fair price and quality service. Check consumer guides, insurance agents, companies, and online insurance quote services to get an idea of price ranges and the companies with the lowest prices. Consult rating companies such as A.M. Best and Standard & Poor's, as well as consumer magazines, to assess the financial stability of the insurers you're considering.

Be an early bird

When changing home insurance companies, you may be eligible for an early bird discount if you secure and pay for your new policy a few days before it takes effect.

How to make a claim on your home insurance policy

Knowing how to make a claim on your home insurance policy is important, as it can help you better manage a significant loss. Here is a step-by-step guide on how to make a claim:

Step 1: File a Police Report (if needed)

If a crime such as theft or vandalism is involved, file a police report before making any other calls. Make sure to write down the names of any police department personnel you speak with or who come to inspect your property. Share all pertinent details of the event with the authorities and keep copies of their reports, as you will need those when filing your claim.

Step 2: Notify Your Insurance Company

Your next call should be to your homeowners insurance company or insurance agent. Most homeowners policies require that the insurance company be notified promptly after any damage, theft, or injury that is likely to result in a claim. While that doesn’t necessarily mean you have to call immediately, the sooner you do, the sooner the recovery process can begin. Reporting requirements may vary by insurance company and circumstance, but your policy and supporting documentation will tell you what you need to do. Some companies also allow you to make a claim online or through an app.

Step 3: Document the Claim

Document all damage, stolen items, and anything else that will form the basis of the claim. Take lots of photos or videos detailing the damage, going room to room if necessary. Compile a list of damaged, stolen, or destroyed possessions, along with their approximate value. This will be faster if you've made a detailed home inventory of your possessions ahead of time. The insurance company will schedule an appointment for an appraiser to interview you and assess the damage to determine how much compensation you can expect. Make sure to accompany the appraiser during the inspection and point out any structural damage or areas of concern.

Step 4: Make Urgent Repairs

Make any reasonable emergency repairs needed to prevent further damage, without endangering yourself. Most homeowners insurance policies allow this and some even require it. Make sure to keep copies of any receipts for reimbursement and take detailed photos of the damage before doing any work.

Step 5: Gather Documentation

Gather all documentation that supports the claim, including photos, videos, and receipts for any expenses incurred due to the damage. Having a completed and up-to-date home inventory can make this process easier.

Step 6: Prepare for the Claim Adjuster's Visit

The insurance company will assign a claim adjuster to assess the damage and determine how much compensation you can expect. Answer all their questions honestly and thoroughly, and provide them with any documentation they request.

Step 7: Obtain Repair or Replacement Estimates

Obtain replacement, repair, or rebuilding estimates from reputable contractors. Working with a contractor that is part of the insurance company's network may make the claims process faster, especially if a claim for supplemental damage is needed.

It is important to note that filing a claim under the right circumstances can help you better manage a significant loss. For example, if the cost to repair damage to your home or the replacement cost of a damaged household item is only slightly higher than your policy deductible, you may want to consider paying these costs yourself. Every time a claim is filed, it is reported to a national database that insurers use to track claim activity, which may increase your premiums at your next policy renewal. Additionally, having repeat claims, even ones with low insurance payouts, might cause a property insurer to non-renew your policy.

Frequently asked questions