How to Switch Home Insurance

How to Switch Home Insurance

Because buying homeowners insurance is such a vital process, you need to find the best policy. In some cases, you might find a better option after signing up for coverage. If that happens, what can you do?  

Switching home insurance is relatively common, so let us dive deep into how it works.

Can You Switch Home Insurance?
Simply put, yes, you can. However, there may be a few steps involved. For example, your current insurance company may charge a cancellation fee. You will see any fees on your declarations page.

These penalty cancelation fees range widely from $20 to $500 and more. Twenty dollars is a no-brainer, but $500 is not. That said, if you save money by switching even after including the fee, it is still worth canceling the old insurance company.

If you have a home mortgage, you will also need to notify your lender when switching. Since the mortgage company is still the house owner, they need to know who is insuring it.

Is It Bad to Switch Home Insurance Companies?
The answer to this question depends on your definition of "bad." If you can save a lot of money by switching to a new insurance company, that is good.

If you are worried about these changes affecting your credit score, they do not. Yes, homeowners insurance companies will check your credit, but it will not show up on your credit report. Insurers perform a "soft pull" of your credit history, so it doesn't affect your overall score.

Can I Switch My Home Insurance at Any Time?
Yes. Homeowners insurance policies will last a year before you must renew. That said, if you can find a better plan or lower price (i.e., by comparing insurance rates with Young Alfred), you can switch any time.

As the homeowner, you have a legal right to find new providers for any reason. Many homeowners don't think about switching carriers, which can cost them more money over the long term.

Can I Switch Home Insurance Companies After Closing?
Yes. Before closing on a new house, you need to provide proof of insurance to your lender. Often, homeowners will prepay a year of homeowners insurance through an escrow account. If you did this, you might assume you have to wait a year before switching. However, you can still change at any time.

Keep in mind that you may have to prepay another full year, but you can get a refund from your original insurer.

Can I Switch Home Insurance with an Open Claim?
Yes. If you have an open insurance claim on your house, you do not have to wait until it is finished. You can still cancel your current policy and switch to a new one. In this case, your previous insurer will still complete the claims process.

That said, insurance claims can be a murky situation since it involves various people. For example, you have the insurance company, the mortgage lender, and possibly contractors. However, you can still switch insurers if you have an open claim. Just keep in mind that the process may be somewhat complicated.

Can I Switch Home Insurance Mid-Year?
Yep, you can switch homeowners insurance at any time. If there is a cancelation fee, it may be better to wait until the end of your term. If the price is not too high, you may want to switch anyway. If you prepaid your home insurance, your old provider should send a refund check.

How to Switch Home Insurance
For a smooth process, follow these steps:

  1. Step One: Review Your Current Policy. Your declarations page should go over any cancelation terms (i.e., fees). If you are unsure about anything, talk with your insurance agent. Your new carrier can also help you.
  2. Step Two: Review Your Coverage Needs. Before switching to a new policy, ensure it provides enough protection. Do not fall into the trap of saving on monthly premiums while getting less coverage.
  3. Step Three: Shop Around. Sites like Young Alfred make it easy by comparing insurance company policy coverages and prices for you. Getting several quotes can help you make an informed decision.
  4. Step Four: Buy Your New Insurance Before Canceling. You want to avoid a lapse in home insurance coverage if possible. Make sure the effective dates are before your cancellation date.
  5. Step Five: Cancel Your Old Policy. You can contact your insurance agent or customer service to cancel your policy. Your carrier might even allow a cancellation through their online portal. If there is a cancellation fee, you must pay it then.
  6. Step Six: Notify Your Mortgage Lender. Often, lenders use an escrow account to pay for expenses like home insurance. Notifying your lender ensures that they can adjust your monthly mortgage payment accordingly.

How to Switch Home Insurance with Escrow
Follow the steps above. Once you notify your mortgage lender, they will take care of any insurance payments in an escrow account. If you do not have enough extra money to pay for new insurance, do not worry. In those instances, the lender often covers the cost, and you repay them.

How to Switch Home Insurance After a Claim
As we mentioned, the claims process is often complicated. However, you do not have to wait until the claim settles to switch home insurance companies. The process is still the same as we outlined above. That said, we recommend talking with your insurance agent to ensure a smooth transfer.

Keep in mind that insurance companies share claims history through the Comprehensive Loss Underwriting Exchange (CLUE). So, even though you are switching, your new insurer will know about all claims within the past five years. If you have made multiple claims in that period, it could affect your new rates.

How to Switch Home Insurance After a Lapse
The process is the same as buying a new plan. However, a lapse in home insurance coverage can be a bad thing, depending on the situation. For example, your mortgage lender may require insurance at all times. So, if your coverage lapses, your lender may buy force-placed insurance on your behalf. In this case, you will likely have to pay a lot more in premiums.

That said, if you can buy a new policy right away, you can avoid these high costs. Mortgage lenders must notify you of force-placed insurance with a window of 45 days so you can switch home insurance to a more affordable option.

How to Switch Home Insurance Before Closing
When closing on a new house, you need proof of insurance. If you have not closed yet, you can switch companies. Just make sure that your new start date is before the closing date. If it is not, you may have to push the closing date back.

If you cannot push your closing date or switch before your closing date, do not worry. You can still switch after you close. Check your cancelation fees, though.

Again, if you prepaid for homeowners insurance and then switched, you will get a refund. The mortgage company can handle the escrow payments on your behalf.

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Other FAQs About Switching Home Insurance

How Long Does It Take to Switch Home Insurance?
The process can take a few days or weeks, depending on how long you shop around. Once you buy a new homeowners policy, it takes a couple of days to kick in.

How Often Can I Switch Home Insurance Companies?
Technically, you can switch as often as you like. However, doing this several times in a short period can be complicated. It is better to take more time to shop around so that you will not feel compelled to switch again soon. Fortunately, sites like Young Alfred can help expedite this process.

Can Our Home Insurance Be Switched to the Living Spouse?
Usually, spouses are already on the home insurance policy, so there is no need to switch. However, the surviving spouse should notify the insurance company as soon as possible. If the spouse is not listed, they may have to prove ownership of the property to take over the policy.

Can You Switch Homeowners Insurance Without a Home Visit?
In some cases, yes, you can. For example, if you recently had a 4-point inspection, that may be enough for the new insurer. Usually, insurance companies do a home visit if they have any specific concerns. If you have an older home with no inspection in the last year, a site visit is more than likely.

What if I Discovered Water Damage After I Switched My Home Insurance?
The answer depends on the cause of the water damage. Most home insurance only covers sudden and accidental damages. So, if water starts leaking from a rusty pipe, you cannot file a claim regardless. If a sudden event causes it, you will file the claim with the carrier that covered you when it happened.

Do I Need a Home Appraisal to Switch Insurance Companies?
Home insurers often need an appraisal to determine coverage amounts. If this appraisal is still recent, your new insurance company may not need a new one. If you have not appraised your home in several years, the insurer will want a new appraisal. Typically, they can do their own instantly through a replacement cost estimate report.

When Do I Renew My Home Insurance After Switching?
As we mentioned, home insurance lasts a year. So, you will renew a year after the policy's effective date.

If My Parent Died, How Can I Switch Home Insurance to Myself?
Instead of switching the policy, you will need to get a new one. You must provide proof of ownership and possibly a death certificate for the parent. Most insurers will keep the current policy in force if someone is living in the house. No matter what, talk to the insurance company and let them know what is happening.

What is the Cost of Switching Home Insurance?
There are no official costs to switch homeowners insurance. That said, you may have to pay a cancellation fee from your old insurer if you switch before the renewal date.

If I Switch Home Insurance Policies, Do I Get a Refund?
Yes, if you prepay your home insurance premiums, you will get a refund. If you pay monthly, you can get a prorated amount if your new policy starts before the month ends.

Switch Your Home Insurance - Start with a Comparison Quote!
Young Alfred makes it easy to compare quotes and coverage amounts from all the top insurers. If you want to save money, let us take care of the hassle of finding a new policy. Click below to get started!

Hope that helps!

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Young Alfred