Learn How to Change Your Homeowner’s Insurance

There are several reasons why you would want to change your homeowner’s insurance. Maybe you bought your policy as a first-time home buyer, and now it’s time to change. It’s possible you’re now frustrated with your insurance agent.  Did your insurance company let you down with a bad claims experience? Is the premium too high after a recent rate increase? If any of this sounds like you, and you’re considering a change in homeowners insurance, the good news is that that hard.

The obvious first step is to locate and purchase a replacement policy. A good place to get this done is with your auto insurance carrier. When you bundle your home and auto insurance you can get additional savings.

Once you find a replacement policy you can cancel your current policy. Make sure you cancel the old policy on, or maybe just one day after, your new policy starts. This prevents any lapses in coverage. If you have an escrow account, then you also need to inform your lender that you’re switching home insurers.

What if I have an escrow account with my mortgage?

If you use an impound account with your mortgage company to pay your insurance premium, this is not a reason to avoid changing your homeowner’s insurance. If you have an escrow account, you simply need to give your lender notice that you plan to change your homeowner’s insurance and provide them with the policy information.

Before you issue your new home insurance policy, you’ll want to make sure your mortgage company’s information is properly listed on the policy. This is called the mortgage clause. It contains their proper name and loss payee and notice address. It’s important to get this correct, as it’s also how your lender receives the billing statement for payment.

When can you change your home insurance?

You are free to change your homeowner’s insurance at any time. However, not all insurance companies refund your premiums on a pro-rata basis, and some may charge a cancellation fee. Therefore, if you plan to cancel your home insurance policy mid-term, you should consult your insurance agent or the company to confirm if there are any cancellation fees, or “short-rate” applied to the cancelled policy.

A “short-rate” cancellation is typically a small amount of the refund premium that is withheld to account for the costs to issue or renew the policy. Under normal circumstances, the short rate gets smaller after the mid-point of the policy term.

Not all insurance companies charge cancellation fees or short-rate cancellations. If your home insurance company does charge a cancellation fee or a short-rate cancellation, it’s typically easier to switch closer to your policy’s renewal date or at expiration. 

Can you change your homeowner’s insurance after a claim?

Sure. As previously stated, you are free to change your homeowner’s insurance at any time. This includes after you file a claim. In fact, as long as your policy was in force at the time of the loss, even if you cancel after you report the claim, your prior insurance company will continue to handle the claim. Your claim will remain with your old insurance company until it’s settled or denied.

It’s important to note, however, that changing home insurance after a claim is not a way to avoid any premium charges that may be associated with the occurrence.

Even if you’ve suffered a claim, you can still get home insurance in most cases. If you’re concerned, you can compare home insurance rates online to see how your current claim may impact what you may pay.

Why would I get a refund check?

If you cancel your homeowner’s insurance mid-term, you may receive a refund check. If you receive a refund check it’s because you’ve paid for more days of coverage than you received at the time of the cancellation. This is typical if you pay your premiums in one lump sum annually. But can occur anytime there is more premium paid on the policy than has been earned by the insurance policy term.

Example: Your annual premium is $1200 and you or your mortgage company pay the premium in full on January 1^st. On May 30^th you cancel your policy and change your homeowner’s insurance to a new company. As a result, the insurance policy would have only earned 6 months of the premium paid, and there would be 6 months of unearned premium remaining. Therefore, you would get a refund of $600.

The bottom line

It is easy to change your homeowner’s insurance, and it can be done at any time. If you have an impound account with your mortgage lender, that doesn’t prevent you from changing home insurance, but it does give you a few additional responsibilities to make sure your new home insurance properly notifies your lender and sends the billing to the appropriate address. However, even that is easy.

If you have questions about changing your homeowner’s insurance, call your insurance agent. If you are looking for new options, please feel free to contact us at (877) 334-7646 or start a quote online.