Can You Switch Home Insurance After a Claim?

Homeowners often consider switching insurers to find better rates or coverage, but doing so after a claim introduces specific considerations. While it is possible to change home insurance providers after filing a claim, the process involves understanding how a claim influences a new insurer’s assessment and managing any ongoing claims with the previous company. Careful planning is required to avoid gaps in coverage and ensure a smooth transition.

Eligibility and Considerations for Switching

A recent claim can affect a new insurer’s willingness to offer coverage and the premium quoted. Insurers evaluate claims history during underwriting to assess risk. They consider factors such as the type of claim, its severity, and the number of claims filed. For instance, a minor claim might have less impact than a major fire or liability claim.

New insurers access claims history through databases like the Comprehensive Loss Underwriting Exchange (CLUE) report, which contains details of claims for the past five to seven years. A history of multiple claims within a short period may indicate higher risk, potentially leading to increased premiums or even a refusal to offer coverage. Premiums can increase from 10% to 50% on average, depending on the claim’s nature and severity.

Managing an Existing Claim During a Switch

If a homeowner switches insurance while a claim from a previous policy is open, the original insurer remains responsible for handling that claim. A new insurance company will not take over an existing claim, as coverage applies to damage that occurred when the policy was active. The policyholder must continue to work with the former provider to ensure the claim is processed and settled.

Maintaining clear communication and thorough documentation with the former insurer is important, including records of all interactions and transactions related to the claim. While switching is permissible with an open claim, it is often advisable to wait until the claim is fully settled or denied. An open claim can create uncertainty for new insurers, potentially making it more difficult to secure coverage or leading to higher premiums.

Steps to Switch Home Insurance

Begin by shopping for new quotes from multiple providers. Compare proposed coverage limits, deductibles, and exclusions to ensure the new policy meets your needs. This comparison should focus on matching or improving current coverage, not just on price.

Once a new policy is selected, confirm its effective date. Set the new policy’s start date to align with the cancellation date of the old policy to avoid any gaps in coverage. A lapse in coverage can leave a property unprotected and may result in higher future premiums.

After the new policy is active, formally notify the previous insurer of your intent to cancel. This notification should be in writing, and confirmation of cancellation should be obtained. If premiums were paid in advance, a prorated refund for unused coverage may be issued. If a mortgage is involved, inform the lender about the insurance change and provide them with the new policy’s details.