12 Steps to Switch Homeowners Insurance Companies
Key Takeaways:
Switching your homeowners insurance coverage to a new company can save you money through reduced rates or better discounts. It’s always a good idea to check annually or whenever you have a change in circumstances.There are benefits and risks when you switch homeowners insurance companies. It’s important to know what they are and how to deal with each one. Read more below.Follow our 12-step guide that gives you ‘soup to nuts’ information on everything you need to do to ensure a smooth transition and avoid any gaps in coverage which can cause problems into the future.
Circumstances can change that impact your homeowners insurance. You may have recently moved or done a major renovation, your insurance costs may have skyrocketed, or you may want to do an annual review of all your insurance coverage checking pricing, discounts, and limits.
Whatever the reason, be sure to follow our 12-step guide so you don’t miss a thing.
How to Switch Homeowners Insurance Companies
If you are asking yourself if you can switch homeowners insurance at any time, the answer can be a bit complicated. We have put together a guide that walks you through the process, but first let’s look at the pros and cons.
Changing home insurance companies can come with both potential benefits and risks. Here are some factors to consider when deciding whether you should switch home insurance providers.
4 Benefits When You Switch Homeowners Insurance Companies
1. Cost Savings
No surprise — One of the main reasons people want to switch homeowners insurance companies is to save money. Different insurance companies offer different policy rates, discounts, and incentives. By shopping around, you may find a policy that better suits your needs and budget.
In fact, one good exercise that everyone should do once a year is a full insurance review. Look at all your insurance policies and coverage. Use an online marketplace, like einsurance.com, to get a price quote and check each of your policies, e.g., homeowners insurance, auto insurance, life insurance, etc. Are you getting the benefit of all the discounts that you’re entitled to? Do all the coverage components meet your current needs? Do you have the best price?
2. Improved Coverage
Switching companies can provide an opportunity to obtain better coverage. Your current policy might lack certain protections or have limitations that a new insurer can address.
3. Bundling and Discount Options
Insurance companies want to incentivize customers to stay loyal, so they have tons of discounts, but you have to ask for them. For instance, if you have multiple insurance needs (e.g., home and auto), some companies offer discounts for bundling policies together.
When you are looking for new coverage, be sure to review the discounts each company offers. The lists can be extensive, and you don’t want to miss a thing.
Read More: The Best Home and Auto Insurance Bundles
4. Customer Service
If you’ve had issues with the customer service of your current insurance provider, switching to a new company may lead to improved service and responsiveness.
4 Risks When You Switch Homeowners Insurance Companies
There are always associated risks of changing home insurance companies, so keep an eye out for these four challenges.
1. Coverage Gaps
During the transition between policies, there’s a risk of potential coverage gaps. Work you’re your new insurance agent to make sure the new policy is in effect before canceling the old one to avoid being uninsured for any period of time.
Gaps or lapses in coverage can cause you to have higher insurance rates in the future or even denial of coverage in the future. If you can avoid it, never have a lapse in coverage.
2. Loss of Loyalty Discounts
As part of the discounts available to policy holders, many insurance companies give long-term customers loyalty discounts for their continued patronage. Switching companies will mean losing those benefits. You will have to weigh the loyalty discount savings against the added benefits available from the new insurance provider.
3. Cancellation Fees
Some insurance policies may have cancellation fees, especially if you cancel in the middle of a policy term. Be sure to check the terms of your current policy so that you incur these fees unnecessarily.
4. Insurance Company Reputation and Financial Stability
Ensure that the new insurance company you choose is reputable and financially stable. You want a provider that will be there to support you if you need to make a claim. All the savings in the world aren’t worth a nickel if your insurance company skips town when you need them.
12 Steps to Follow When You Switch Homeowners Insurance Companies
Switching homeowners insurance companies can be a straightforward process if you follow these 12 steps.
1. Review Your Current Policy
Carefully go through your existing homeowners insurance policy to understand its coverage, deductibles, and any limitations or exclusions. This may include things like ‘Loss of Use’ (when you have to vacate your home due to loss or damage, how do you pay for lodging, etc.) or ‘Limitations on Mold Removal.’ Be sure to also take note of the policy renewal date which you’ll need to coordinate the timing of your coverage change.
2. Compare Quotes
To be thorough, you’ll want to obtain quotes from several different insurance companies (again, trust a marketplace quote engine, to take the guesswork out of quote gathering). Be sure to consider factors like coverage, deductibles, premiums, customer service reputation, and any additional benefits or discounts offered. Ensure that the new policy meets your specific needs for the future.
3. Timing
Be sure you don’t wait until the last minute to start the process. Ideally, you will want to start looking for new insurance several weeks before your current policy is set to be renewed. This will provide you with enough time to switch companies without any lapses in coverage.
4. Notify Your Current Insurer
Once you’ve decided on a new insurance provider, contact your current insurance company to let them know about your decision not to renew the policy. You may need to follow specific procedures, such as sending a written cancellation request, so be sure to do this in plenty of time.
5. Avoid Lapses in Coverage
As we’ve already said, be absolutely sure that your new policy becomes effective before canceling your current policy. Having a gap in coverage could lead to financial risks if any incidents occur during that time or possible increases to future insurance rates.
6. Gather and Provide All Necessary Information
Provide all the required information and documentation to your new insurance company promptly. This might include details about your home, personal and demographic information, previous claims history, etc. You may have provided the information originally when getting a quote, but the new insurance company will want hard copies of certain documents for your policy.
7. Coordinate Closing Your Old Policy
In this case, timing is everything! Confirm (and reconfirm) the exact date and time your new policy begins and coordinate with your new insurer to ensure a smooth transition without any gaps.
8. Cancellation of Your Old Policy
Once your new policy is in place and active, contact your old insurer and request the cancellation of your existing policy. As a precaution, it’s always a good idea to ask for written confirmation of the cancellation for your records.
9. Refunds and Payments
When you make a major financial change like moving insurance companies, be sure to track your switch homeowners insurance refund. If you’ve paid your current insurer for the entire year upfront, they may owe you a refund for the unused portion of your policy. Be sure to verify the exact amount with your old insurance company and ensure you receive the refund promptly.
10. Update Your Mortgage Lender
If you are financing your home and your homeowners’ insurance premium is part of your mortgage payment, you will want to inform your lender of the switch, so they can make the proper adjustments accordingly. Most mortgage companies require that you pay them directly for your insurance premiums and they keep that money in escrow and pay your insurance when due.
That is the best way for a mortgage company to ensure that the insurance protecting their assets is paid on time. If you have a second mortgage, that company should be notified as well since they also have a personal stake in protecting the property.
11. Notify Any Other Affected Parties
It’s important to notify any other affected parties. For example, if your homeowners’ insurance was bundled with other policies (e.g., auto or life insurance) and you’re not switching all your policies to the new company, notify the relevant parties of the change.
12. Keep All Documentation Somewhere Safe
As with all financial documents and insurance policies, keep records in a safe place that you can access in the event of a disaster, such as a fire or other natural or manufactured catastrophe. It’s important to retain all documents related to the switch, including confirmation of policy cancellation, the new policy, payment receipts, and any other relevant communication.
By following these steps, you can make the process of switching homeowners insurance companies smooth and ensure that your home remains adequately protected under your new policy.
A Few Additional Tips for a Smooth Transition
Here are a couple of additional tips that may be helpful as you explore your options for homeowners insurance coverage.
Here’s a question that comes up fairly frequently — how often should you change homeowners insurance? That’s really up to the individual homeowner. As we outlined above, some prudent homeowners do an annual review of all policies and use a quote engine, like the one available at einsurance.com, to find the best prices on coverage.
Others prefer to set up the policy and forget it. And still others only check their coverage when there is something they become aware of and they want to ensure their policy is adequate, e.g., a neighbor experiences a catastrophic event and has to be out of their house for a year. Now ‘loss of use’ coverage becomes top of mind which prompts a review or change.
When choosing a new carrier, do your due diligence and thoroughly research the new company. There are many comparison websites that rate all types of financial companies. Or try your state’s insurance department or consumer review website. Investigate the new insurance provider’s reputation, customer reviews, and financial strength before committing to their coverage.Review New Policy Carefully Make sure the new policy offers the coverage you need and understand any changes or limitations compared to your current coverage. If you don’t understand the language or the implications, you can always talk with legal counsel or an insurance agent.Check how insurance companies handle their claims – are they fast at paying or do they take their time? You can find this information at your state insurance department.Check the discounts available with the new insurer and be sure you are getting everything you are eligible to receive. Discounts can include:Multiple policy bundlesClaims-free discountsLoyalty discountsPaid in full discounts (as opposed to monthly payments)Military discounts or discounts for other affiliations, organizations, or careersSenior discountsNew home discountsSafety protection discounts for security monitoring, fire sprinklers, etc.Weather-fortified improvements discounts for hurricane-resistant windows, stormproof roofing, etc.Green home discounts for homes with Energy Starä or LEED components
To Sum Up
Before making the switch, it’s essential to weigh the potential benefits against the risks and decide if changing home insurance companies is the right decision for you. If you’re unsure, consider discussing your options with an insurance agent or representative who can provide personalized advice based on your circumstances.
You can also contact einsurance.com to find information and initiate the quote process.
Kathryn has a background as a small business owner and currency trader. Kathryn also enjoyed a career as a Regional Director and COO in healthcare, specializing in operations, third-party insurance reimbursement, and revenue cycle management.
