A Guide to Changing Homeowners Insurance Providers

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You’ve heard of the phrase “there’s plenty of fish in the sea,” right? While this phrase usually refers to dating, the same can be said about who you get your home insurance from. So whether you’re looking for something new or are purchasing your first home, consider shopping for home insurance a type of speed dating.

When getting to know your potential home insurance suitors, make sure to learn what protection they offer, take note of how they treat their dates and ask what incentives they offer as well. Not sure if changing insurance is the right move? Our guide below will help break it down.

Key takeaways:

  • Before you get started on the process of switching home insurance, it’s a good idea to make sure you understand what home insurance does (and doesn’t) cover.
  • While it may be tempting to switch home insurance companies after you file a claim, switching companies doesn’t give you a clean slate.

Pros and cons of changing homeowners insurance

With a slew of new insurance companies backed by state-of-the-art technology hitting the market every year, you might be wondering if it’s time to switch providers. And you aren’t alone. According to one 2019 study, over 25 million customers were considering switching insurance providers over the next few years. So why make the switch? There are various pros and cons to taking the plunge.

Pros of changing home insurance providers:

  • Saving money
  • New member perks and discounts
  • Insurance riders automatically rolled into policies
  • Opportunity to bundle multiple insurance policies

Cons of changing home insurance providers:

  • Potentially becoming riskier in the eyes of providers
  • Losing coverage in particular categories
  • Not being able to take advantage of customer loyalty deals

When should I change homeowners insurance providers?

Knowing when you should change home insurance providers can be trickier than it seems, especially if you aren’t sure exactly what you’re looking for in your coverage. Generally, your insurance policy will last for one year. And while you can change before your policy's effective end date, it might end up costing you extra money to do so because of cancellation fees  (though sometimes you can get that money back via a refund check).

It’s a good idea to shop around for a new policy every few years, or even more frequently if you’ve just purchased a new home.

It’s a good idea to shop around for a new policy every few years, or even more frequently if you’ve just purchased a new home. This will help you understand what the standard rates are for your area, as well as new deals so you can take advantage of them. You should also take a look at your current policy to figure out what you feel is missing. Have you made a lot of updates to your home that aren’t reflected? Do you think you’re paying too much for your current plan? Once you have the answers to these questions, you’ll be in a better position to start talking to new insurance agencies.

Should I change homeowners insurance after I make a claim? 

While it may be tempting to switch home insurance companies after you file a claim, switching companies doesn’t give you a clean slate. Your CLUE report (Comprehensive Loss Underwriting Exchange) hosts all the claims you’ve made and is accessible by any insurance carrier, meaning your claims history doesn’t go away just because you’ve switched providers. You may have a more challenging time securing coverage if you have a lot of claims on your CLUE report or if you have a history of switching providers after each claim.

5 steps to changing homeowners insurance

There are five main steps to properly change your home insurance and make sure you have the coverage you need (without any gaps). But before you get started on this process, it’s a good idea to make sure you understand what home insurance does (and doesn’t) cover. You can also do more research on our home insurance learning center to make sure you’re able to make an informed decision.

1. Review your current coverage

The first step to changing your coverage is to look over your current policy. Your policy’s declaration page should provide you with all the information you need, such as coverage limits, deductibles, insurance riders, exclusions, price and your effective date. This will allow you to determine what you like (and don’t like) about your current coverage to know what to look for in your next insurance policy. 

You’ll also need to determine if you use an escrow account to pay your home insurance, as that means you’ll need to loop in your mortgage company early when changing insurance providers.

2. Check out a few home insurance providers’ rates

After reviewing your current policy, your next step is to shop around and get quotes from several different insurance providers. Get a feel for how they treat their customers by keeping track of wait times and reading through reviews from current policyholders. And once you do get an insurance agent on the phone, make sure to ask specific questions based on what you uncovered in step one.

You’ll also want to check with each provider on what discounts they offer for new policyholders. Many will provide a new customer discount on your yearly premium, while others offer smart home kits when you sign up or add insurance riders to your policy free of cost.

3. Buy your new policy

After the shopping period is over, it’s time to buy your new insurance policy. It’s important to make this new purchase before you cancel your previous policy to ensure you have no coverage gaps. When making that purchase, whether over the phone or online, you’ll need to have some information on hand. This includes (but isn’t limited to) background information on your home and your previous providers.

When buying a new policy, make sure to know ahead of time what additional protection you’ll need. Endorsements that protect your second home or solar panels can always be added to your policy later. Still, it’s recommended to purchase them early to get coverage ASAP. And once you have all the coverage you need, you’ll need to let your insurance provider and mortgage lender know.

4. Tell your old insurance provider

Once you’ve purchased your new policy, you’ll need to let your old insurance provider know. Make sure to give them an exact end date of your old policy, ideally the same as your new policy’s start date. You can let them know you’re canceling your policy over the phone, though some companies may want it in writing (and it’s a good idea to get it in writing for legal purposes). Before severing ties with your old insurance company, however, make sure to understand how you’ll receive your rebate if you qualify for one.

5. Speak with your mortgage lender

Finally, you’ll need to tell your mortgage lender about the change in providers. Most lenders require proof of insurance throughout the life of your mortgage, so even if you aren’t paying for insurance through escrow, they still need to know you have coverage. Make sure to give them ample notice of your new insurance company as well as documentation of the type of coverage you have, how much you’re paying each year and your policy number.

If you’re paying home insurance through an escrow account, you’ll need to let your mortgage company know even sooner than if you pay for your policy out of pocket.

If you’re paying home insurance through an escrow account, you’ll need to let your mortgage company know even sooner. This will ensure they have enough time to transfer where your funds are being sent on a monthly basis. And if you do qualify for rebates from your old home insurance provider, they’ll send the money back to you, and you can reinvest that back in your escrow account if you prefer.

Switching home insurance doesn’t have to be a yearly occasion. By taking the time to research to find a company that truly puts your needs first, you won’t need to worry about who to switch to next. Ready to start shopping? Give us a call to learn how we’ve modernized the home insurance industry.