How to change your homeowners insurance carrier

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If you want to change homeowners insurance, make sure your new policy is in effect before canceling your current policy. Learn more. (Shutterstock)

If you have a mortgage, you’re typically required to carry homeowners insurance. These policies are crucial to protecting the investment you’ve made in your home, helping you pay to repair or replace your property if it’s damaged in a disaster or other unexpected event.

But you’re not required to stick with any particular insurance company. You’re able to change carriers at any time — to get a better rate, or to find an insurer with better customer service — though it’s not always the easiest process. In this article, we’ll go over the steps to change your homeowners insurance policy.

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How to change your homeowners insurance policy

As you change your homeowners insurance policy, you’ll want to make sure that you’re doing two important things: maintaining coverage on your home at all times, as well as following all the rules that your mortgage lender may have for insurance. Take care to follow these steps to ensure you do both — while getting the best deal on your new policy.

Review your current policy

Read through your current policy carefully, making sure you understand your coverage limits, deductible, and any additional coverages you’ve purchased. These might include earthquake insurance, for example, or special riders to protect your valuables.

It’s also a good idea to find out your current insurance carrier’s cancellation policy. But don’t do it yet: You don’t want to have a lapse in coverage before your new policy kicks in. This can put you at risk if your home is damaged during this time, and your mortgage lender may purchase a home insurance policy for you that’s more expensive than one you’d buy yourself. 

Consider what changes you want to make

With your current coverage information in hand, see if you need — or want — to make any changes. For example, if your home has increased in value, you may want to up your coverage limits. 

If you have any new valuables, you may want to add insurance riders to protect them. And if you have a larger emergency savings fund, you may consider switching to a policy with a higher deductible to save on your home insurance premium. 

Shop around with different insurance carriers

Most insurance companies make it easy to request quotes online. You’ll select the coverage levels you want and provide information about your property and your family. Then you can typically choose from several policy options with different deductibles or other features.

In general, you’ll want to get quotes from at least three home insurance providers. As you compare quotes, take a look at:

  • Types of coverage — Most standard home insurance policies have coverage for the structure of your home, your belongings, liability, and living expenses after a disaster. However, you may find quotes that include other types of coverage. Make sure the policies you’re comparing have similar coverages for an accurate comparison.
  • Coverage levels It’s important that your coverage limits are also the same in the quotes you’re considering — and high enough to adequately protect your home and belongings. If the limits are different, you’re not getting a true apples-to-apples comparison.
  • Deductible — The higher your deductible, the lower your monthly premium tends to be. However, you’ll need to pay more out of pocket when you file a claim. On the flip side, lower deductibles typically mean a higher monthly premium, but you’ll pay less if you file a claim. Make sure to choose an insurance policy with a deductible that you can afford.
  • Premiums Your premium is the amount you pay to maintain your coverage. Different insurance carriers can have significantly different prices for their policies.
  • Ease of filing a claim If your home is damaged, you want to know that you can easily file a claim. This includes the process for filing — often done through an insurer’s mobile app — and customer service. This is harder to quantify, but be sure to check out each insurance carrier’s reputation for service before committing to a policy.

With Credible, you can compare home insurance rates from top insurance providers in minutes.

Select a new homeowners insurance policy

Once you’ve taken all these factors into account, choose the best new homeowners insurance policy for you. Price will obviously be a major factor, but keep in mind that the cheapest policy isn’t always the best policy.

After you select the new carrier, the insurer will provide the steps to finish your application and purchase the new policy. You may need to answer questions about who lives in your home, your mortgage, the insurance you’ve had in the past, any renovations or alterations you’ve made to the home, and any appliances, plumbing fixtures, or safety devices you’ve installed.

When your application is complete and the insurance carrier approves your policy, you’ll receive documents outlining your coverage and proof that your policy is effective on the date you chose.

Touch base with your mortgage lender

Make sure your mortgage lender is aware that you’re switching home insurance providers. In many cases, you pay your home insurance premium as part of your monthly mortgage payment. Your lender holds this money in an escrow account, and uses it to pay your premiums.

The mortgage company will be able to provide details on any steps you’ll need to take when changing insurance.

Cancel your current policy

Once you have documentation of your new policy, you can safely cancel your former policy. This can often be done online, but you may need to call your insurance carrier to complete this process.

Remember, you don’t want to have any lapses in coverage. You can generally specify the date when you want to have your existing coverage end. You may receive a refund of premiums you’ve paid from your former home insurance provider. However, you may also need to pay penalties or fees for canceling coverage. Be sure to check with your current insurer so you know what to expect.

When should you change homeowners insurance?

It’s a good idea to periodically review your home insurance and comparison shop to see if you can get a better rate with a different insurer. Do this before your policy is set to renew. You may find that you can get similar coverage at a better price from another insurance carrier.

You should also consider changing your homeowners insurance if your home has significantly increased in value or if your financial situation changes. You may need to increase your coverage limits to fully repair or replace your home and belongings if they’re damaged by a covered event, like a fire. Standard homeowners insurance policies also include protection against legal liability, and your liability coverage limit should be high enough to protect your assets. As your net worth rises, your liability coverage may need to as well.

Before changing policies, however, make sure that you won’t need to pay any fees or penalties to do so. If your insurance provider does require a cancellation fee, it may make sense to wait until your policy is set to expire before making the switch.

What if you have an escrow account?

In many cases, your mortgage lender collects money to make your home insurance premium payments along with your monthly mortgage payment. This money goes into an escrow account, which your lender then uses to pay for your policy. 

This is why it’s so important to make sure your lender is aware that you’d like to change carriers. Your lender will be able to give you instructions on how to do so smoothly. 

Will you get a refund from your current insurer?

You may, depending on your policy and how you make your payments. In many cases, you’ll pay for six months or a year in advance. When you cancel your policy, you may receive a prorated amount as a refund for the length of time you paid for insurance you’re no longer using.

Check out Credible to compare home insurance rates from multiple insurers quickly and easily.

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