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When to look for a new home insurance policy

WRITTEN BY: Amelia Ciffone

UPDATED: MAY 24, 2022 | 2 MIN READ

Is today a good day to look for home insurance? Only you can determine that. Unlike tire rotation or changing the batteries in your smoke detector, there’s no rule of thumb about when you should look for insurance. However, there are a few events that might prompt you to start shopping for homeowners insurance for the first time or as a change to your existing policy. We’ve detailed them below.

When you’re buying a house

This probably the most obvious reason to start shopping for home insurance. For most people, a house will be the most valuable item they ever purchase. It would be unwise to allow something that valuable to go unprotected. Many mortgage lenders also require borrowers to have a home insurance policy.

If you are a first-time homebuyer, finding insurance should be at the top of your to-do list along with finding a lender and real estate agent. Even if you have not found a house yet, you should start learning about insurance companies and taking inventory of the possessions that you’ll want to insure. You will need to have a homeowners insurance policy in place before you close on a new house, so having this information in order will streamline the process.

When you have a rate increase

There is no requirement that you stay with the same home insurer forever. If you’ve been with the same carrier for a long time, your premiums could have increased significantly and you may not have even noticed.

A premium rate increase — sudden or gradual — should prompt you to at least comparison shop with other homeowners insurance companies. You may find that your insurer’s new rates are in line with competitors. If not, now may be time time to work with a new company that provides comparable or better service at a more affordable rate. 

When there are changes in your community

Home insurance premium prices are based partially on the circumstances of your surrounding area. Weather, crime rates, and availability of emergency resources all play a role in determining your insurance rates. When one or more of these factors changes — for better or worse — then it’s a good time to shop around. Insurance companies all calculate risk slightly differently, so it may be advantageous for you to keep track of the changes to your community.

When your policy is not renewed 

Policy non-renewal is an unfortunate but true reality for some homeowners. Insurance companies can drop customers. Common reasons include a high number of claims or significant changes to the risk level of the surrounding area. If you receive a policy non-renewal notification, you should first ask your insurer for the rationale behind the decision because you may be able to dispute it.

If you do find that you cannot stay with your carrier, be sure that you give yourself enough time to find a new one. You do not want to find yourself uninsured. This is especially true if you have a mortgage, as your lender may force you to take on an insurance policy that is more expensive than most carriers. 

When you make home renovations 

Home insurance policies are meant to cover your dwelling and personal property as they were when the contract was drafted. If you have made significant changes to your home since that time, you may actually be underinsured since presumably, your home is more valuable now. You should notify your insurance company of these changes to see how it will affect your premium. You should also price compare with other carriers.

If your home renovations also include something that an insurance company would consider dangerous (e.g., a pool), then you definitely want to look for new home insurance. Carriers have varying rules in place for coverage of items they deem an “attractive nuisance.” Some companies won’t provide coverage at all. If you are thinking about doing any kind of addition, you may want to contact insurance companies beforehand to learn about how it could affect premiums.

When an insurer can’t pay 

In the event that you do have to file a homeowner’s insurance claim, that last thing that you want to deal with is an insurance company that’s broke. It’s a pretty rare occurrence, but if your insurance company suddenly goes bankrupt or out of business due to bad management or an overwhelming statewide disaster, you will need to find a new one as soon as possible.

Hopefully, you would not have to go through such extreme circumstances. Keep an eye on your insurer’s credit rating. If you are worried about the viability of the business, start shopping for a new policy as soon as you can. 

When you get bad customer service

Insurance is a business transaction. As long as you are paying your premiums, you don’t owe anything to an insurance company–especially if they are treating you badly. Customer service representatives should be able to answer your questions accurately. The company should process claims quickly and efficiently and give you an adequate explanation if the claim is denied. If you don’t feel like your insurance company can protect your home and assets, then i’s time to move on. 

Sources: Consumer reports | SF Gate | The Balance

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