Published: June 2015
Q: I'm moving. When do I cancel my old homeowners insurance, and when do I start the new one? How much notice do I need to give?
A: "We like to have customers give us a call as soon as they plan to put in an offer on a house," says Carly Hiteman, an Allstate agency owner in Naperville, Illinois. "That way, we can talk about the cost of insurance and some of the risks they may face in buying that new home."
Delaying that important call may leave you unprepared, Hiteman says.
"We had a case where a customer put in an offer and found out later that the house was in a flood zone," she says. "By calling in advance, we can talk about the cost of flood insurance, for instance, or the fact that it will be a requirement for as long as you have a mortgage."
Requirements aside, flood insurance can help protect your property even after your loan is paid off.
Contacting your agent in advance can also help make sure you get the timing of the old and new policies right.
"You want to cancel the old policy on the date you no longer have ownership in the property, and start the new policy on the date that you have ownership in the new home," says Hiteman.
But you don't ever want to stop a policy based on a future closing date, she cautions, because they frequently change.
"You can't ever assume a closing date is solid," she says. "They get pushed back. Things come up. So we contact our customers after the closing to make sure the house actually closed, and then we can backdate the cancellation on the old house."
Calling your agent early-on can also make sure you don't experience any hiccups with the lender, because mortgage companies may request certain conditions in connection with the policy.
"For example, they may have requirements regarding the deductible amount, or they may require escrowing, which changes how someone will pay for the insurance," says Hiteman.
Preparing up front can help ensure that the insurance is "good to go" when you need it, she says. "There are so many other things with the home buying process that are going on, that you don't want insurance to be anything that hinders the purchase."