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How to Switch Home Insurance Carriers

WRITTEN BY: Amelia Ciffone

UPDATED: MAY 26, 2022 | 1 MIN READ

It’s easy to hold on to our insurance carriers for years without really thinking about it. If it isn’t broke, don’t fix it. Your home insurance policy may not be broken, but there may be better and more affordable options available to you. 

You’re not required to keep the same homeowner’s insurance policy indefinitely, and in most circumstances, you can change it at any time. Here’s how to switch home insurance carriers whether you’re dissatisfied with your current carrier, or just think it’s time for a change.

Why Would I Change Home Insurance Carriers?

Many people stick with the same home insurance carrier because companies often offer discounts for loyal customers. These discounts often make long-term customers wary of switching, but you may find it beneficial to leave for the following reasons: 

  • Price Savings – Sticking with the same insurance company for a long time may make you unaware of pricing changes. After researching or getting quotes from a new company, you could find that your carrier’s rates are uncompetitive even with a loyalty discount. 
  • Bundling Policies – If you have auto insurance with a different carrier, you may find it cheaper to bundle all of your insurance policies with one company. You may also be offered significant discounts to incentivize you to bundle. 
  • Changing Coverage Needs – What you initially need in an insurance policy can change significantly over time. If you have made additions to your home or acquired more valuable items, your carrier may not be able to accommodate your needs. It may be time to find a new insurance company that provides policies more in-line with your new circumstances. 
  • Poor Service – If your insurer’s customer service quality is deteriorating, it may be time to look for a new company. Bad customer service may suggest that you will have difficulty submitting claims. 

When is the Best Time to Change Home Insurance Companies?

In most cases, any time is a good time to change home insurance. If you find a better deal, cancel your old policy and move on. There is really no reason to continue paying for an expensive policy or dealing with poor service just because you’re in the middle of the coverage period.

There are, however, a few reasons why you may want to hit the pause button on changing policies. Here are some factors to consider: 

  • Your time and energy – Changing a policy mid-year is a bit more complicated and less clean-cut than just not renewing a policy. If you don’t have the time to do the paperwork and report these changes to your mortgage lender, you may want to wait. 
  • Outstanding claims – If you have any outstanding claims, you should wait until they are resolved or paid out before canceling your current policy. You may have a more difficult time communicating with an insurance company when you are no longer a customer. 
  • Leaving a bundled policy – If your home insurance policy is bundled with auto or another type of insurance,  you should find out how the remaining policies will be priced. You may end up paying more than you thought by leaving a multi-policy arrangement. 
  • Cancelation penalty – While uncommon, some insurance companies will penalize customers who cancel their policies early. Be sure to review your contract before attempting to cancel your policy. 

How to Switch Home Insurance Carriers

If you think it’s time to switch home insurance carriers, here’s how to make the change: 

1. Shop around for a new policy 

Use online resources or work with an independent agent to find a carrier that meets your coverage needs and your budget. Once you have found the ideal home insurance policy for you, purchase the new agreement effective on a particular date. 

2. Cancel the old policy

Contact your home insurance carrier and inform them that you are ending your policy, effective on a certain date. You may want to cancel your policy in writing in addition to over the phone. Make sure that the old and new policies overlap enough so that you have no lapse in coverage. 

3. Notify your lender (if you have one)

If your mortgage lender finds out that you have canceled your home insurance but is not aware that you have a new carrier, it may try to force a lender-based insurance policy on you. Lender insurance is expensive and will raise your monthly mortgage payment. You can avoid that by keeping the bank informed of your decisions. 

Special Note: Mortgage Lenders and Escrow

Many homeowners do not pay home insurance directly to the carrier. Mortgage lenders often set up an escrow account where they pay upfront annual payments for home insurance and property taxes. You pay them back gradually throughout the year. 

If you cancel your policy mid-year, your insurance company will send you a partial refund. It’s important to send that refund directly to your mortgage lender. Otherwise, the lender may charge you for both insurance policies until the old one is paid off.

Sources: Nerd Wallet | The Nest | Quicken Loans

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