Can I Switch Home Insurance Companies At Anytime?

If you’re paying a mortgage on your home, you’re likely also paying for homeowners insurance. Typically, home insurance is set up for you as part of your escrow account when you purchase your home, and they make the payments for you.

But the truth is that: 

Even if your escrow account is paying your insurance premiums, your still able to switch home insurance companies easily—it only requires a few additional steps.

In this post we will review if you can change homeowners insurance in the middle of the year and costs associated with switching, and costs associated with not switching.

Can I Switch Home Insurance Companies In The Middle Of The Year?Yes. You can. There are a few things to consider, but if you find a better deal on homeowners insurance, in most cases, you should switch your policy over.  You may even get a refund. 

What Are The Risks Of Changing Insurance Companies?The biggest risk of changing insurance companies is that your coverage will lapse, and you will be uninsured. You don’t want to risk that even for a moment. The consequences can be costly.

We also do not recommend dropping homeowners insurance for the same reason. The average claim for fire and lightning damage between 2013 and 2017 was $68,322. Water damage and freezing claims were $10,234 on average, and wind and hail damage averaged $10,182.

If your homeowners insurance has lapsed, those funds will be coming directly out of your pocket.

Can Changing Homeowners Insurance After A Claim Prevent Your Premium From Rising?No. While another insurance company may offer you a lower insurance rate than your previous company, it’s not because they don’t know about your claim.  Insurance agencies have access to national databases that contain your claim history. You shouldn’t expect to be able to hide a previous claim form your new insurer.

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Why Do People Switch Homeowners Insurance Companies?People switch insurance companies for many reasons. It could be as simple as not liking their current insurance company’s customer service, or they found a better deal elsewhere. The main reasons people decide to change homeowners insurance companies, including that they:

Find a company that offers the same or similar coverage at a lower rateWant a higher level of customer service than their current company providesMay be eligible for discounts at another company that will save them moneyNeed more coverage, and their current company doesn’t offer it or offers it for a higher cost than elsewhereHave an opportunity to bundle their homeowner’s insurance with other insurance policies they’re carryingHow Often Do People Switch Homeowners Insurance Companies?Believe it or not around 75% of people don’t do any shopping for home insurance before they buy their home. This means that you probably need to look at switching today and then as mentioned, review your homeowners insurance policy every two years. Some people do this more often and others less. It truly is up to you. However, if you are not gaining some benefit from switching your policy, it’s likely not worth the effort.

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How Do I Change Homeowners Insurance Companies?Once you’ve found a company that you want to switch to, changing your coverage is relatively easy. Just follow these below steps and you will be on your way to switching your policy.

Review your current policy to understand the coverage amounts and what your premium is. Look for any early cancellation fees or penalties.Fill out the application for the new company. Ensure the offered rates are better than what you’re paying for comparable coverage, including fees and penalty costs. Verify your new insurance policy will start on the date needed.Contact your current insurance company and tell them the date you want your coverage to end. Most will require this in writing or via email. Make sure your old insurance policy coverage and your new coverage do not leave any coverage gaps.Tell your mortgage company and your escrow company about the change. This is important. If they find a lapse in coverage, they may sign you up for emergency coverage to protect their investment. Emergency coverage is costly.That’s it; I want to reiterate how important it is to ensure your insurance doesn’t lapse. The average claim cost reached $18,311 in 2022. You don’t want to pay that out of pocket especially when it’s most unexpected.

What If I Purchased Coverage Through An Escrow Account?If you pay for your homeowners insurance through your escrow account, you may wonder, “How do I change my homeowners insurance with escrow?” Changing homeowners insurance companies is not any more difficult if you’re paying your premium through an escrow account. We explain it in detail below.

What Is An Escrow Account?When you get a mortgage and pay less than 20 percent of the house’s value as your down payment, your lender will set up an escrow account. This account pays for things like property taxes, mortgage insurance, and homeowners insurance while you are still paying for your home.

How Do Escrow Accounts Work?When you make your monthly mortgage payment, you are actually making two payments. One is to your mortgage, and the other goes into your escrow account, which handles the other payments needed. Your monthly statement tells you how much of your money goes toward your mortgage and where the rest of the funds are going.

How Do I Change My Homeowners Insurance With An Escrow Account?You don’t need to keep the same homeowners insurance company if you have an escrow account. You can even change homeowners insurance after closing. Just follow the same steps we listed earlier on this page. Depending on how much is in your escrow, it is possible that you’ll have to make an additional payment, but if the new policy has a lower premium, a refund is more likely.

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Taking ActionIf you haven’t reviewed your homeowners insurance policy in several years, now is the time. You may find significant savings and Switching insurance companies is easy, whether you are paying through an escrow account or directly to your insurance company If you want to update your homeowners insurance, we’ve done the hard work for you—just click on any of the above buttons.

Frequently Asked QuestionsCan I switch home insurance companies at any time?

You can switch home insurance companies at any time, even mid-policy. There are no penalties for switching, and most insurers will refund unused premiums. However, it’s best to have a new policy in place before canceling the old one.

Does switching home insurance affect my mortgage?

Switching home insurance does not negatively affect your mortgage as long as your new provider meets your lender’s requirements. You must notify your lender and provide proof of the new policy to ensure compliance.

Will I get a refund if I cancel my home insurance?

If you cancel your home insurance, most companies will refund any unused portion of your premium. This refund is usually prorated based on the remaining term of your policy.

How do I switch home insurance companies?

Switch home insurance by comparing quotes, buying a new policy, and then canceling your old one. Notify your mortgage lender of the new provider and ensure there is no lapse in coverage during the transition.

Is there a fee to cancel home insurance?

Most home insurance companies do not charge a cancellation fee, but it’s important to check your specific policy. Some may deduct a small administrative fee or short-rate penalty for early cancellation.

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