How to Change Your Homeowners Insurance
Explore a structured approach to evolving your homeowners insurance coverage. This guide provides insight into managing your policy transition.
Changing homeowners insurance is a process many homeowners consider for various reasons. This guide outlines the practical steps involved in updating your policy, ensuring a smooth transition and continuous protection for your property.
Gathering Information and Comparing Options
Before initiating any change, gather information about your current homeowners insurance and understand your specific needs. Review your existing policy’s declarations page, which summarizes your coverage, limits, deductibles, and any endorsements. This document typically lists your policy number, effective and expiration dates, the insured property’s address, and details about your coverages, such as dwelling, personal property, liability limits, deductible amounts, and applied discounts.
Your claims history is important, as it influences future premiums and policy eligibility. Insurers use databases like the Comprehensive Loss Underwriting Exchange (CLUE) to track past claims, which typically remain on record for several years. Understanding your claims history provides context for new insurers, as frequent claims can lead to higher premiums or non-renewal.
When evaluating new policies, consider the type of coverage that best suits your needs, such as an HO-3 or HO-5 policy. An HO-3 policy, the most common, provides “open perils” coverage for your dwelling (covering all causes of damage unless excluded) but typically covers personal property only for “named perils.” An HO-5 policy offers broader “open perils” coverage for both dwelling and personal property, covering all risks not explicitly excluded, and usually provides replacement cost value. This comprehensive coverage often comes with a higher premium.
Beyond the basic policy type, assess your need for additional endorsements or riders for specific risks or valuable items. Common endorsements include coverage for sewer backup, identity theft, or scheduled personal property. Inflation guard coverage automatically adjusts dwelling limits for rising reconstruction costs.
Compare quotes from multiple insurers, obtained through independent agents, captive agents, or online aggregators. When comparing, look beyond the premium; consider the insurer’s financial strength, customer service ratings, available discounts (such as for bundling policies or having security systems), and deductible options.
Initiating the Change
Once you select a new homeowners insurance policy, formally apply for the new coverage and coordinate the cancellation of your existing policy. The application requires detailed personal and property information, including your name, contact details, property address, and desired effective date. Insurers conduct an underwriting process to assess risk and determine your premium.
Timing the switch is important to prevent any gaps in coverage. Ensure the effective date of your new policy aligns precisely with, or slightly precedes, the cancellation date of your old policy. Having a new policy confirmed and active before canceling the old one is a safeguard, helping avoid a lapse.
Canceling your old policy requires formal notification to your current insurer. Provide written notice, often via a specific cancellation form. The notice should include your full name, the insured property’s address, your policy number, the exact cancellation date and time, and details about your new insurance company and policy number. If you paid your premium in advance, you are usually entitled to a prorated refund for the unused portion of your policy term, which typically arrives within a few weeks. Some insurers may deduct administrative fees.
Finalizing the Switch
After your new policy is active and your old one canceled, complete several administrative steps. First, confirm your previous policy has been formally canceled and any due premium refunds processed. Refunds for policies paid through an escrow account typically go back to the escrow account, rather than directly to you.
Notifying your mortgage lender about the new insurance policy is necessary, as most lenders require proof of continuous coverage. Your lender will need specific information, including the new policy’s declarations page and the new insurer’s contact details. Failure to notify your lender can lead to them force-placing expensive insurance on your home.
Upon receiving your new policy documents, review them carefully. This confirms all agreed-upon coverages, limits, and endorsements are accurately reflected. Finally, update your personal financial records to reflect the change in insurers and policy details. Inform relevant parties, such as family members or financial advisors, about your updated information.