Are you house shopping? It's not the only good time to think about switching your home insurance. The reality is that you can change your home insurance coverage anytime, just like you do with car insurance. Think of it as an annual assessment of financial protection around your home and belongings. It can also be a really smart way to save money or change companies if you're not satisfied with your experience.
It may seem a little more daunting than switching car insurance, especially if your homeowners insurance premium is tied to your mortgage payment. It just requires a couple of extra steps. We're here to help you navigate the process with these 5 tips!
1. Check for terms and conditions
The first thing to do is check if there are any penalties or fees if you change from your existing home insurance before your policy renews. If you're replacing an active policy and there is a fee, it still may be worth changing home insurance if the savings make up for it. You can also opt to wait until your current policy's renewal and coordinate effective dates.
2. Contact an independent insurance agent
The operative word here is "independent." A captive insurance agent can only sell for one carrier. An independent agent is like having your own personal shopper to help you find the best home insurance fit for you. It's a no-brainer! Be prepared to speak with your agent with a copy of your current policy declaration page showing coverages and deductibles for review. You'll also need basic information about your home, such as size, location, and age. It's good to have an itemized list of special high-value items like business equipment and jewelry that may need to be insured separately.
3. Compare insurance carriers
It's important to focus on more than just rate. Smart shoppers dig into the details and rely on the expertise of an agent to find the best fit for you. Find out what coverages are included and excluded, like earthquake damage and sinkhole collapse. Are there valuable endorsements needed due to risks in your part of Virginia, or are they included? Is there any need for flood insurance? What about available discounts for paying in full and bundling in your car insurance? Should you consider adding another coverage like personal umbrella insurance?
Check out each carrier's service promise and online reviews. The claims experience is where the rubber hits the road, the place you really need your insurance company to deliver. What do people say about their claims experience? It should be responsive, helpful, and efficient. You know the old saying; you get what you pay for.
4. Avoid a lapse in homeowners coverage
Your agent can help you synchronize the important transition between the end of your existing home insurance policy and the start of your new policy. It's essential to have the new policy in effect before canceling your old policy to avoid a lapse in coverage. Heaven forbid you experience damage to your home the one day you weren't covered, leaving you financially on the hook for repairs.
Your lender will also get notified if there's a lapse in coverage. As the financial backing for your home, they have a vested interest in protecting it and can purchase "forced insurance" at your expense. Other insurance companies also may consider a lapse in home insurance as a risk indicator and charge you higher premiums down the road.
If you're navigating this process on your own, be sure to coordinate the dates with your new insurance company so that the new effective date is on or before your old policy's cancellation date. Get a written confirmation that your old insurance policy won't automatically renew and how you'll be reimbursed for the unused premium.
5. Notify your lender
Depending on how your home loan was set up, your home insurance may or may not be paid directly from your loan's escrow account. Either way, you should let your lender know of the change in home insurance. You may be able to do this by phone unless written notification is required. If you have an escrow, your lender needs the necessary information to pay the new insurance company.
When contacting your lender, be prepared with your mortgage loan number, the name and address of your new insurance company, your old and new policy account numbers, and a copy of your new home insurance declaration page.
And that's it! We hope you take advantage of an independent agent's added value and service, whether you are changing your home insurance or not. Our agents are the best! You can find a local agent in your area or let us connect you to one. Then think about getting a new home insurance quote. It may be the smartest financial thing you've done all year!