How to change homeowners insurance companies

How to switch home insurance companies

Changing your home insurance is easy, and you can do it in just four steps.

Step 1. Shop for a new policy

Compare home insurance quotes and find a carrier that can offer you a better deal while meeting all your insurance needs. You can easily compare average home insurance rates and get quotes just for your needs online. Make sure you know how much coverage you need based on your current policy and the updated replacement cost of your home. Compare quotes with the same amount of coverage, and don’t forget to check each company’s reputation.

Step 2. Apply for new insurance

Once you have chosen your new company, you can complete the application process either online, over the phone, or with an insurance agent. You will need to provide some basic information, such as the location and size of your home and the year it was built.

Do you have any special items that you need to insure separately, such as jewelry or business equipment? Those items should be listed in your application. Before you commit to and purchase new coverage, make sure the policy you are applying for has all the features you want and deductibles you can manage.

Step 3. Make the switch effective by canceling the old policy

Once your new policy is processed, you can cancel your existing homeowners insurance policy. Depending on your insurance company, you may be able to do this over the phone, or you might need to do it in writing. If you're not sure how to tell your insurance agent you are leaving, ask if your new insurance company can handle this part for you. Just make sure it’s done so you don’t pay for two policies or miss out on any refunds.

Step 4. Notify your mortgage company

If you have a mortgage, the company needs to be notified of the change. Usually, the new insurance company will send the mortgage company proof of insurance, and they’ll contact you to verify it. It’s a good idea, however, to contact them yourself to be sure.

Make sure you have on hand the following information:

The name and address of your current company
The name and address of the new company
Your mortgage loan number
Your old and new homeowners policy numbers

Insurance is a requirement of your mortgage, and if the company receives a cancelation notice without a new policy, it can cause problems.

How do you change homeowners insurance with an escrow account?

For homeowners who have an escrow account set up with their lender, the mortgage company will make a payment to the new insurance company. You’ll need to make sure there’s enough in your escrow account to cover it, especially if you are changing mid-term.

Although you pay your homeowners insurance as part of your monthly bill, the mortgage company pays it in full at each renewal. So, if you’ve paid for one policy and change before renewal comes up, the escrow account may fall short. Call your mortgage company to discuss it.

Can you switch home insurance at any time

It makes sense to switch homeowners insurance companies any time you can lower your rate or get better coverage for your money. If your rates have gone up on renewal, it's time to shop around.

If you're buying a new home, you don't have to stick with your current company. Start shopping for insurance as soon as a seller accepts your offer, Lori Conarton, spokesperson for the Insurance Alliance of Michigan, says.

"It is a big investment, and you want to protect it starting the day you walk through those doors as owners,” she says.

If you’re moving to a bigger house or downsizing to a condo, your insurance needs are changing. That means a different insurance company might better serve your needs.

Renewal is the easiest time to change to a new home insurance company since you just won’t renew the old one and start the new one instead, but there's no reason to wait if you can save money today.

Why change home insurance companies?

There are several reasons to change your homeowners insurance carrier. Shopping around is a great way to make sure you “get the best price, service and coverage,” Conarton says.

Four common factors that might cause you to shop around are:

Price. If your rate is going up, or even if it’s not, shopping around can save you a lot of money. It’s always worth checking.
Discounts. It might be worth switching to bundle your auto and home insurance and get a discount, and other discounts can be a factor as well.
Service. Consider shopping around if you haven’t been satisfied with the service you receive, whether it’s regular interactions or during a claim.
Coverage. A new insurance company might offer additional insurance -- such as sinkhole coverage -- or less restrictive coverage than you can get with your current carrier.

How to manage payments while changing homeowners insurance

Your new company might want payment immediately. In fact, it might not start coverage until it receives a check. Keep the effective date in mind when telling your current carrier when to cancel your homeowners insurance policy.

Your mortgage lender might agree to send the check on your behalf using money from your escrow account. Be sure to clarify with your lender what its payment practice is and whether it will send the check for you.

Ask about any refunds your current carrier might owe you. Your insurance company might send the money to your mortgage lender or to you. If you get the money directly, your lender may ask for it. Find out where to send the payment to keep your escrow account in good standing.

How much does it cost to change homeowners insurance?

There's no real cost to changing your home insurance to a new company, although depending on the circumstances, you may have to pay a down payment on the new policy, or there may be penalties for early cancellation with the previous company. Make sure you ask about any such fees before you make the switch.

Risks of changing home insurance companies

Some risks to consider when switching insurers include:

A penalty for early cancelation of your current policy
Losing discounts such as a loyalty discount or bundling discount
The risk that your new insurance company doesn't live up to its reputation for customer service or claims

Frequently asked questions about changing home insurance companies

Can I switch home insurance companies in the middle of a policy?

You can switch home insurance companies in the middle of a policy term. However, there may be some financial considerations, such as potential cancellation fees or refund policies from your current insurer. It's advisable to review the terms of your current policy and compare them with the offerings of other insurance companies before making a switch. Also, ensure there is no gap in coverage during the transition period to protect your home and belongings.

How often can you change homeowners insurance?

You can change home insurance as often as you like, but bear in mind that there may be penalties or administrative fees for canceling early.

Do I get a refund if I cancel my homeowners insurance?

Yes, you will be refunded for the remainder of the policy term from the date of cancellation. You will not receive a refund for any period of time that the policy covers you.