7 Simple Steps to Changing Homeowners Insurance Companies
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UPDATED: May 26, 2021
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A homeowner’s insurance policy is a smart investment in one of your most important assets and all of the personal property inside of the dwelling.
If you’re not satisfied with your current coverage, however, you’re encouraged to transition to a new company that meets your wants and needs.
Making a change in homeowners insurance providers can be very beneficial, but there are certain steps that you need to take based on one of two factors:
Whether you pay your policy through your escrow account or you pay directly.
How to Change Homeowners Insurance Providers
Perhaps you’re looking for a better rate, or you’re simply unhappy with the service from your current provider.
No matter your reasoning, changing homeowners insurance providers can be a smooth and seamless process if you plan ahead.
Understanding terms and conditions, as well as shopping around before settling with a provider are some of the critical factors to consider before making the transition.
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7 Steps To Transition To a New Homeowners Insurance Company
1. Check your current terms and conditions
Before jumping ship, you need to sit down and look over the terms and conditions of your existing policy, as there may be certain penalties or fees for terminating the contract before it expires.
Most lenders will advise waiting until the policy is up for renewal, or when you reach the midpoint mark to avoid any frustration that comes with canceling outside of contract agreement.
If you do decide to wait until one of the time periods, make sure to notify your insurer in advance (about two weeks to a month) to avoid the potential automatic renewal of the policy.
2. Assess your coverage needs
There’s a reason you’re changing insurance providers. If it’s because your current insurer doesn’t provide the coverage you need in your unique situation; then you need to be clear and concise about what you’re expecting to get out of your next policy before you commit.
Think about the adjustments you’ve made to your home, for example. If you recently upgraded your shingles or added a garage to your property, you may want to consider increasing your dwelling protection. To properly calculate the amount of homeowners insurance to consider with your next provider, Esurance recommended:
- Estimating the cost to rebuild your home.
- Taking inventory of your personal property.
- Assessing policies beyond default coverage limits.
- Understanding your assets.
From there, you can decide how much you’re willing to pay for a deductible, what type of coverage you need to consider and more.
3. Shop around
Think about how picky you were during the home-buying process. You had a list of wants and needs and wanted to make sure they were met, so you looked at various potential homes before committing to one.
You should have the same mindset when choosing a homeowners insurance provider. The Insurance Information Institute insists on shopping around to get the best rate.
Talk to friends and family members, browse consumer guides, talk to insurance agents, and utilize other online resources to get quotes, so you have an idea of your price range.
While the cost will certainly be the most important factor for you, don’t forget to consider financial and customer service reputation before committing. The Better Business Bureau and A.M. Best can assist you as you shop around for your next homeowners insurance policy provider.
4. Discuss potential discounts
Another important factor to discuss with your next potential insurance provider is the opportunity for discounts or other ways to save money. Every insurer will have their own discounts, so it’s important to ask around and see if and how you qualify.
Some of the most common ways to save money, according to Insurance Hub, include:
- Investing in a multi-policy discount
- Going a certain period of time without filing a claim
- Having a burglary system
- Using a fire alarm system and keeping it up to date
- Bundling with auto coverage
- Making home improvements regularly
- Living in a community with a homeowner’s association (HOA)
- Paying for your policy in full
Talk to all of the insurers you’re interested in about these discounts, and don’t be afraid to ask if they offer any other options for reduced costs that are specific to their company.
5. Don’t cancel right away
Remember: It’s not wise to cancel your current insurance policy until you sign a new one because there’s always a potential for a disaster to occur between policies.
6. The right time to cancel with your current provider
Once you have all of your ducks in a row, you can contact your existing provider and let them know that you’re moving on to a different company.
Make sure you schedule your cancellation date so that it lines up with the start date of your new policy. Additionally, it’s wise to get confirmation in writing or via email that the policy is no longer in place. Make certain this document also states that there’s no potential for automatic renewal and that the policy is cancelled on the effective date.
You may be entitled to a refund from your previous insurer as well. Perhaps you paid your policy in advance and you are canceling before it expires. If this provider doesn’t charge you a cancellation fee, they might reimburse you for the funds. Don’t be afraid to ask!
7. Let your new lender know
This is another important factor to consider if you have an escrow account; you need to let your lender know a few weeks in advance if you plan on changing providers so that they can make the adjustments to your bill so the payments continue as they should.
Regardless of your reason for switching home insurance providers, you have plenty of options. If you need help finding the best option for your unique situation, browse the Top 10 Best Homeowners Insurance list today.
What is an Escrow Account and How Does it Work?
Understanding how an escrow account works will assist you during the transition between insurance providers. There are a few more variables to consider if you’re using this method instead and not paying for the insurance directly.
When you take out a mortgage and you have a lower down payment, most lenders will require you to open up an escrow account.
According to Escrow.com, this is an essential step during the home buying process, as it protects against fraud, change backs and wrongly described goods, saving you stress if something goes wrong on the seller’s end.
Opening up an escrow account also provides a place to store funds for property taxes and homeowners insurance. Just like protecting your home is essential – and sometimes required by most lenders – this account offers another layer of coverage to ensure all payments are being made.
Funding in your escrow account pays for your mortgage bills as well, so the total will be dispersed to that, homeowners insurance and property taxes. Every month, you will know how much money was paid to each factor, and how much is left in the account in general.
Remember, because property taxes and home insurance rates can technically increase annually, your escrow payment may adjust too. This is something to keep in mind if you ever plan on switching to a different homeowners insurance carrier.