How Do I Switch Home Insurers?

Switching to a different home insurance company could save you hundreds of dollars per year while also ensuring you have the right level of protection for your needs. Finding a new insurer requires some time and effort on your part, but it can be well worth the effort.

How to switch home insurers

Step 1: Learn about your current insurance plan

To determine whether switching insurers is worthwhile, you must first understand your current coverage — and how much it costs. Check with your current insurance provider for the following information:

Monthly premium
What coverages you have
Policy renewal date
Cancellation fee for canceling early, if any

Some home insurance companies charge a flat fee or a percentage of your remaining annual premium to cancel your policy before it expires at the end of the year. Determine whether you'll save money by waiting until your policy renews or switching right away, but keep in mind that the cost of your home insurance is unlikely to change significantly over the course of a few months. It is entirely your choice whether to pay the early cancellation fee or wait until the end of the year.

Step 2: Determine your coverage requirements.

If you haven't purchased home insurance in a while, your coverage requirements may have changed. Reevaluate how much insurance you require to adequately protect your home and family.

If you've recently made a significant number of purchases, or if the size of your family has changed, you're especially likely to need to make coverage changes.

Step 3: Obtain quotes, including those from your current insurer, and purchase coverage.

The next step is to obtain several insurance quotes, including one from the company you currently use. To ensure you get the best deal, we recommend getting quotes from at least five different companies.

Include your current insurer, as well. It's possible that your new insurance requirements will have an effect on what you're paying, so check with it to see if your rates have dropped.

Step 4: Purchase a new policy and notify your lender.

Purchase a policy once you've found the best home insurance company for you. If you're simply letting your old policy expire without renewing it, make sure your new policy begins before it does.

If you have a mortgage, notify your lender that you've changed home insurance companies; your mortgage lender is likely to require insurance, so if you skip this step, the company may believe you let your insurance lapse.

Step 5: Cancel your previous policy.

You can safely cancel your old policy once your new policy has taken effect. If you're terminating it in the middle of the year, find out what you need to do to get a refund for any unused premiums.

Switching home insurers with an escrow account

Some homeowners pay their mortgage payments, property taxes, and home insurance into a single account managed by their mortgage lender, known as an escrow account. These are especially common among homeowners who have paid less than 20% of their home's down payment.

If your home insurance is paid through an escrow account, you'll need to contact your lender before purchasing a new home insurance policy, because your lender will pay your home insurance premium instead of you. It's especially important to contact your lender if you have a policy renewal coming up, because it may renew your policy 30 to 60 days before the actual date.

When to consider switching home insurance companies

You can change home insurance companies at any time, not just when your policy expires. If you find a better price for coverage or if your current company is no longer meeting your needs, you should think about switching home insurers.

However, if you've had a life change that affects how your rates are calculated, you're more likely to find a better deal on home insurance. While each insurance company calculates prices differently, they all use similar information to determine how much to charge, such as your age, the location and value of your home, and your claim history.

If you've experienced any of the following changes since purchasing your current home insurance policy, it's worth considering switching providers:

You shifted.
You added to or improved your home (such as a new roof)
You purchased a car (remember to look into bundle discounts!)
Your household's population has changed (such as a marriage, new baby, move for college, divorce)
Your credit score has increased.
You have a pet.
You installed a security system or other features.
Your current insurance rates have risen.

Some of these changes may have an impact on your coverage requirements. For example, adding on to your home will almost certainly increase the cost of rebuilding it, so you'll need to increase the amount of dwelling coverage you have on your home to match.

The best time to switch home insurers is when your current policy expires (usually annually), because you won't have to worry about getting a refund or paying cancellation fees. If you're serious about saving money on home insurance, it's a good idea to get a few quotes every year before renewing to ensure you're not overpaying.

When not to switch home insurance companies

It's never a bad idea to get a quote to see if you can save money on home insurance, but the hassle of switching may not be worth it.

The most common scenario is that your insurer charges you a cancellation fee or retains a portion of the prepaid premium. This is usually only an issue if you cancel your policy in the middle of the year. To be sure of the amount, check the details of your policy or payment terms, as it will vary depending on your policy. Weigh that amount against the amount you'd save by switching, and then decide whether to wait until the end of the year to make the switch.

The good news is that home insurance rates do not fluctuate significantly over time. If you find a company that is currently offering you a lower rate, chances are they will also offer you a lower rate in six months.

Another time when switching home insurers may not be worthwhile is when you are in the process of filing a claim. To be clear, switching insurers is perfectly legal during this time, and your insurance company will still pay out the claim if you cancel coverage. However, it adds to your workload during an already stressful time—especially if the claim process is lengthy. Coordination with claims adjusters and repair personnel may be more difficult if you are also attempting to cancel your policy. The hassle of dealing with two insurance companies at once may not be worth the savings you'd make over a few weeks.