Can I Change My Home Insurance Policy in the Middle of the Year?
The average cost of homeowners insurance across the nation is currently $1,211. So, what happens when you find a provider offering cheaper rates? You may consider switching insurance companies.
With hundreds of insurance companies across the nation, switching homeowners insurance policies can seem like a daunting task. If you're thinking about shopping around for a new provider, then you may be holding off because you're unsure about how to go about it. Luckily, it's a straightforward process as long as you avoid a few costly mistakes.
Why Do People Switch Homeowners Insurance Companies?
Typically, there are four main reasons why people change providers:
- Affordable Prices: They find a homeowners insurance provider that is offering a lower premium at similar coverage levels.
- Better Service: They're frustrated with the service their current provider offers and want to experience a higher level of care and support.
- Special Discounts/Smarter Service: They've found an agent that is smart in applying all the discounts that the customer deserves.
- Better Coverage: They may need an add-on or endorsement for something their current provider does not offer.
How Often Do People Switch Homeowners Insurance Policies?
Homeowners should review their home insurance policies at least once every three years. When looking over your plan, it's a great idea to compare coverage options specific to your area. If you find cheaper rates, it isn't always a better policy - you may need an expert to evaluate the coverage differences.
How Do I Change Homeowners Insurance Companies?
Once you've found a new homeowners insurance company, changing is a seamless process. Follow these steps to avoid any heartache and headaches that come with gaps in coverage.
- Step 1 – Fill out an application for the new insurance policy. After getting back your rates, you can compare coverage options to the market and what is in your current plan -- see Step 2.
- Step 2 – Review your current homeowners insurance policy: you want to check your coverage and make sure the plan you're changing to isn't just sacrificing coverage for the lower price -- unless you are looking for a more slimmed-down coverage option.
- Step 3 – Contact your current homeowners insurance company: You'll need to inform them when you'd like your policy to end. How a provider accepts notification can vary. Some prefer it in writing. Others prefer it to happen over the phone. Either way, it's usually a simple statement that says, "I would like to terminate my coverage on [Cancel Date]."
- Step 4 – Tell your mortgage lender and escrow account that you're changing policies: this is very important. If you don't tell your mortgage lender, they may sign you up for an emergency coverage policy called Forced-placed or Lender-placed Coverage. These policies are costly. So, keep your lender in the loop to avoid paying for one of these plans out of escrow.
- Step 5 – Make sure you're covered continuously. You'll want to make sure the start date for your new policy is on the day that your current policy finishes. You do not want to miss even ONE second of coverage, especially when you consider the average home insurance claim cost in 2017 was $15,532. If you aren't covered, and something happens on that lapse period, you would be entirely responsible for damages.
Will I Get a Refund from My Homeowners Insurance Company?
Technically, yes. Your current insurance provider will send you a check refunding you the pro-rata unused portion of your policy term -- as long as you cancel after the first 60 days. Note: you often cannot get back your down payment if you pay your policy in installments. All taxes and fees cannot be refunded. Examples fees in your home insurance policy:
- State and Federal Taxes
- MGA Fees
- Inspection Fees
- Installment Fees
- Credit Card Fees
If you paid a $1,200 premium January 1st, and there were no fees or taxes, when you cancel your coverage on October 31st, you will receive a refund for the two unused months, or $200.
I hope that helps!
At your service,