Five steps to changing your homeowners insurance

By Allstate

Last updated: January 1

Whether you're moving to a new house or trying to save money, switching your homeowners insurance policy may seem daunting. But changing homeowners insurance companies can be a hassle-free experience.

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Can I switch homeowners insurance at any time?

Yes. You have the right to switch your homeowners insurance at any time.

If you're in the market for a home, you'll want to start shopping for home insurance before you purchase a house. That's because most mortgage lenders require you to buy some type of homeowners coverage before closing.

If you already have coverage, you can change your insurance provider before your homeowners policy expires, but you could incur a penalty or fee. Alternatively, you can switch to new homeowners insurance once your policy expires.

How often should I change my homeowners insurance?

Homeowners policy terms typically last for one year; you'll likely receive a renewal letter before the term is set to expire. This gives you a chance to review your policy and see if you need to make any adjustments. Your renewal statement will also include any rate changes.

Step 1: Check the terms and conditions of your existing policy

Look at your existing policy's terms and conditions for details regarding early termination. If you're unsure about the policy's effective dates, you can review your homeowners insurance declarations page.

Step 2: Think about your coverage needs

Even if you think you just want to transfer your existing coverages, limits and deductibles over to a new insurance company, it's a good idea to evaluate your current coverage needs. They might have changed since you signed up for your last policy. Plus, by letting your insurer know about the upgrade, you could get a discount on your homeowners insurance premium.

Step 3: Research different insurance companies

As you compare homeowners insurance rates from different insurers, make sure you get quotes with matching coverages, limits and deductibles. Check out your policy declarations page to see your current coverages, limits, and deductibles.

Price isn't the only thing that matters. Remember to consider other important factors like the insurance carrier's reputation and customer service availability.

Step 4: Start your new policy, then cancel your old one

According to the National Association of Insurance Commissioners (NAIC), it's important to have a new policy in place before canceling your existing home insurance to avoid a lapse in coverage.

There are a few things to consider when you call your previous insurer to cancel your policy or let them know you won't be renewing:

  • Make sure the cancellation date is on or after your new policy's start date.
  • Get a confirmation that your policy is canceled or won't be automatically renewed.
  • Find out if you're entitled to a refund. If you've paid your policy in advance and are canceling before your term expires, you may get some or all of that money back. Your insurance provider will be able to help with this.

Step 5: Let your lender know

When you take a mortgage out on your house and put down less than 20% of the purchase price as a down payment, your lender may open and manage an escrow account, which holds cash for specific home-related expenses like property taxes and your homeowners insurance. When you pay your monthly mortgage payment, the amount you're billed includes the cost of these expenses. Your lender disperses the money accordingly through your escrow.

The NAIC recommends you inform your mortgage company of your insurance change so they can direct homeowners insurance payments from your escrow account to the correct insurer.

Simply send a copy of your homeowners insurance declarations page and your former policy's cancellation notice to your lender.