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- Homeowners should get home insurance quotes at least once a year.
- Homeowners insurance agents can help you compare similar coverage.
- You may want to increase your home insurance or add riders.
Rising inflation, labor shortages, and supply chain delays are among the few economic factors causing increases in the cost of homeowners insurance. So shopping for competitive rates is more important than ever. For some homeowners who are already pushing the limits of their budgets, homeowners insurance premiums could determine whether they can afford to own a home.
“Consumers should pay close attention to their coverage to ensure that it’s still fit for them, and shouldn’t be afraid to shop around if they don’t feel their insurance is right for them at that time,” says Ted Olsen, vice president of Goosehead Insurance an online insurance broker offering homeowners insurance policies for different structures including condos as of 2023.
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Why you may switch home insurance companies
Homeowners may switch home insurance companies for multiple reasons. Commonly, shoppers look for a new homeowners insurance company to get a better deal. They may also change insurers to receive a bundling discount with their auto insurance company. Occasionally, homeowners may switch insurance companies due to a negative experience with their insurer.
The first time you file a claim is the worst time to find out you don’t have sufficient coverage. But for many reasons, it happens to countless homeowners every year. Of course, if it’s an issue of insufficient coverage, you may want to discuss options with your insurance agent.
Alternatively, a homeowner may need more insurance for a bigger home or less insurance when downsizing to a condo. So, they change homeowners insurance companies to get better customer service or rates with another company.
Can my homeowners insurance company stop me from switching?
If you’re in the market to buy a home, your mortgage company may require you to purchase homeowners insurance before closing.
You can switch homeowners insurance companies anytime if you already have insurance coverage. The easiest way to change homeowners insurance companies is by waiting for your current policy to end before buying a new one. However, you may have to pay an early cancellation fee if you cancel mid-term. You’d then receive a refund for the remainder of your insurance policy if you paid for a year’s coverage.
“While there is no “right” time to switch your home insurance, certain life events provide an opportunity to switch your policy to meet the adjustments and changes being made,” says Olsen.
The important thing is to avoid letting your policy lapse. Whether due to nonpayment or something else, any (unplanned) lapse in coverage is a red flag to homeowners insurance companies assessing your future applications.
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How to switch your homeowners insurance company
Changing homeowners insurance companies can be easier than you think. You’ll need to get your ducks in a row before you make the switch to ensure you don’t have a lapse in coverage. However, you can cancel your policy in minutes, especially with online portals and phone support. Being prepared goes a long way to making any switch as painless as possible.
Step 1: Revisit the terms of your current policy
Skim your policy to familiarize yourself with your current coverage. Look at policy details such as your deductible, coverage limits, policy exclusions, endorsements, and the type of homeowners insurance policy you have. Pay special attention to your insurance riders. All these things will help you compare similar plans as opposed to reducing costs by giving up essential coverage.
“Before diving into your search for a new insurance company, ask yourself a few questions,” says Olsen.
- How much homeowners insurance do I need?
- How can I lower my home insurance rates?
- Are my deductibles still appropriate for my financial situation?
- What are the limits of the policy I’m considering?
Step 2: Gather the information you need to get quotes
Preparing ahead by gathering documents can improve your homeowners insurance shopping experience. Your current policy goes a long way. But you should also have a picture ID and other personal information. If you’ve recently updated your roof or plumbing, come with a rough estimate on the date or the invoices and receipts from construction professionals if available.
Your insurance agent will run a replacement cost estimate to determine your coverage needs. If you’re concerned about how your insurer handled a recent claim, raise those concerns with your insurance agent. They may advise on the best homeowners insurance companies to better serve you or which riders are essential.
Step 3: Find a trusted homeowners insurance agent
You can look through online reviews and third-party rating agencies to find companies that offer top-rated homeowners insurance policies. Similarly, you can look for insurance agents with positive online reviews.
The Insurance Information Institute (III) recommends gathering quotes from at least three different insurance companies to compare. Call company-specific insurance agents if you want quotes from companies like Allstate and State Farm. If you’re looking into smaller companies or online giants like Progressive and Nationwide, an insurance broker partnering with those companies can run quotes for you. If you’re working with a broker, many can run three quotes for you, meaning you only have to go through the application process once.
Finding the right insurance agent is crucial. You want someone you can trust to look out for your interests and educate you about things the average homeowner might not know. A good agent may be the difference between making your family whole and rebuilding your home as you want it after a significant fire vs. coming out-of-pocket to rebuild your home and replace personal belongings due to insufficient coverage. It could also be the difference between getting paid or denying your claim in severe cases.
Step 4: Purchase a new home insurance policy and cancel your old one
When changing homeowners insurance companies, you want to avoid a lapse in insurance coverage. You also want to avoid paying for two policies simultaneously. To effectively switch insurers, look at your existing policy to determine when your coverage ends. You should then set your new policy’s effective date to start on or immediately after your current insurance policy ends.
You can switch home insurance mid-term. But you may have to wait a bit for your refund. Again, if you have a trusted insurance agent, they can facilitate the switch. The agent can contact your old insurer to cancel your policy after tracking your new policy to ensure it will be in force with no gap time.
Step 5: Notify your mortgage lender of the change
If you have a mortgage on your home, you’ll likely have a homeowners insurance escrow account with your lender. An escrow account rolls your property taxes and insurance premium into your monthly mortgage payment. This makes it easier for buyers while assuring the mortgagee the property is protected and will not be subject to tax liens.
It’s important to let your lender know of the switch so it can redirect your payments to the correct insurance company. Some mortgage companies allow homeowners to enter new policy information online. Others require homeowners to call in, but you can talk to a live agent regardless.
Once your mortgagee has this information, it will reach out to your insurance agent or the company to get the proper documentation and have a copy of your annual bill mailed to the right place.
How often should you change homeowners insurance?
While you don’t have to change your homeowners insurance often, experts say you should shop for homeowners insurance at least once a year for affordable rates. Homeowners insurance companies offer lower rates, discounts, and other rewards for loyal customers. However, this year’s most affordable insurance company may not be so affordable next year, especially when the market is in flux (due to the aforementioned supply chain delays and other issues).
Build a relationship with a trusted insurance agent regardless of how often you switch. Any company can offer cheap homeowners insurance coverage if you cut your benefits. We use “affordable” to describe well-written homeowners insurance plans to cover homeowner needs at competitive prices. Unfortunately, it’s hard to tell which companies offer the most affordable rates without comparing at least three companies.