How Do You Switch a Homeowners Insurance Policy?

Fran Majidi
January 23, 2019

Many homeowners stick with the first home insurance policy they sign onto because they feel stuck. Why? Because their homeowners policy feels tied to their mortgage when it’s not. The reality is that the two have little to do with one another. You may have had to report your homeowners insurance coverage to your lender, but that’s only to satisfy the requirements of your loan. Your lender may even be making the insurance payments after you pay in one lump sum. Why does the responsibility of paying for insurance fall into your lender’s hands? An important mortgage requirement is to ensure that the property is protected with a standard home insurance policy. Remember that until your home is paid off, it technically belongs to the lender. However, homeowners insurance is not inextricable from the mortgage loan and you can switch carriers at any time. As long as you make sure there’s no lapse in coverage when you bounce from one policy to another, you should be fine.

Because agents know that many homeowners get tied down to the first policy they buy, they often keep the rate high. On the other hand, some carriers offer discounts to homeowners who have had coverage with them for years. It’s important to shop around to see what other competitive rates are available to you. Only then will you know if you’re paying too much or if your agent gave you a good rate. A reliable, easy-to-use and accurate service to use for comparing homeowners insurance rates is SmartFinancial.

Why Should I Switch My Homeowners Insurance?

Most people are not as actively shopping around for home insurance, so chances are that they are paying too much. For this reason, switching homeowners insurance carriers can really pay off. Certainly, you don’t want to switch to a lesser carrier or lose any important coverages for a lower price but you may be able to bundle your auto and home Insurance for a great deal if you compare insurance rates. Your best bet is to call both your home and auto carriers to see who offers you the most coverages at the best price if you bundle. 

Another reason people switch is the service they’ve received has been less than satisfactory. For instance, you may have had to file a claim and found your current carrier to be unresponsive to your needs. Or, maybe you feel as if you didn’t have appropriate assistance in buying your policy and found out after filing a claim that you weren’t covered for certain perils that you are especially at risk for. People who’ve learned the hard way often switch their Homeowners Insurance based on bad personal experiences.

Buying a new home is another reason people switch homeowners insurance policies. Even if you have no complaints about your current carrier, you may decide to try another company offering a better deal. Make sure you’re being discounted for things like being located next door to the firehouse or having a brick home, which makes it less fire-prone. See if you can improve upon the rate you’re currently paying. Bundle your auto policy with your new home insurance for an additional discount.

You may buy a new home that has a swimming pool or is situated in a flood-prone area, which poses more risk and increases your rate. If your current carrier isn’t helpful in keeping your rate low, you may shop rates with other insurance companies and find a better deal (remember to bundle your auto with it for a discount).

How Do I Change My Homeowners Insurance Policy?

  1. First, you’ll want to shop several rates. You can do this yourself, but it will likely take you several days of waiting on the phone and submitting the same information over and again. You also have the option of working with an insurance technology company like SmartFinancial which generates multiple quotes in just a few minutes. Why would you spend days doing this yourself when the service is free?

  2. After you choose which company you want to go with, you’ll have to fill out an application. You’ll likely repeat many of the same questions you were already asked for the quote. Make sure to add other items you need to insure, such as jewelry or business equipment for a home office. Here is also where you choose a deductible. Remember that the higher the deductible, the lower your monthly payments will be. With that said, you’ll want to be able to manage your chosen deductible if you ever have to file a claim. If it’s more than what you can pay, you won’t be able to get your claim paid.

  3. After your new homeowners insurance policy has been instated, you can safely cancel your previous policy by calling the insurance company. You can also do so in writing, but make sure to follow up to be certain that your letter has been received.

  4. Contact your mortgage lender right away. This company is who you are paying every month, homeowners insurance included. This is why so many homeowners are reluctant to change their policies: It feels like one payment to one destination. However, the lender actually sends the payment to the insurance company. It’s important to alert your mortgage lender right away because if they find out that you canceled your old policy and do not know of a newly instated one, they may take out a forced homeowners policy on your behalf, which they are legally allowed to do. The reason why lenders do this is to protect their investment (your home) in case something goes wrong. They do not want one day to pass without protection for their asset. The problem with all this for you is that a forced policy is incredibly expensive, when you want to pay as little as possible. Call right away to get instructions on whether or not you have to send in a written copy of the following information: the name and address of your former insurance company and the new one. You’ll also need to provide your old and new homeowners policy numbers as well as your mortgage loan number. Contact your lender even if you pay your homeowners and mortgage separately. 

Can You Switch Homeowners After Filing a Claim?

Yes, you can switch homeowners insurance after a claim, and conversely, an insurance company can cancel you as a customer if they feel you’ve filed too many claims. It’s never a good idea to file a claim unless it’s absolutely necessary for this reason. Your claims history is in a database where a new insurer will see how many claims you’ve filed. When insurance companies see that you are quick to file claims, which are costly, they know that they will not make a profit underwriting your policy. You may have a hard time finding anyone to cover you. It’s important to choose your battles wisely when filing any insurance claim, especially homeowners insurance.

Get a Free Home Insurance Quote Online Now.

Related Articles

Home Insurance 32 New Year's Resolutions for a Fiscally Smart 2021

At the top of the list, is reviewing insurance policies. Are you getting the coverage you need at the price you want? If not, it may be time to change policies. Need a different price? Shop around for better offers.

Home Insurance How to Clean Your Gutters and Why it's Important to Keep them Clean

Gutters and downspouts work to navigate water flow off the roof so that there is no standing water that can lead to complications such as rotting wood, rotting fascia and foundation cracks

Looking for Home Insurance?

Compare rates from dozens of companies in less than 3 minutes.