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Homeowners insurance is more than just a requirement by your lender until your loan is fully paid—it's a safety net for your home and your finances. But as life unfolds and circumstances change, so do your insurance needs. You may want to consider changing your home insurance if you want to reduce costs, need more coverage or are unhappy with your current provider.
Here are six reasons why it might be time for you to review and potentially change your homeowners insurance policy.
1. Your Insurance Provider Raised Your Rate
Insurance costs are going up, and this includes homeowners insurance. From 2018 to 2023, homeowners insurance costs rose by 30.7%, according to S&P Global. If you just got a rate increase from your insurer, it may be time to start shopping for a new provider.
Homeowners insurance prices are calculated based on a number of factors, including the size of your home, location, how old the home is and the materials used to build it. Even so, insurance premiums can vary across different insurers, so it's a good idea to compare rates. While costs are increasing across the board, by periodically reviewing your policy and researching competitors' rates, you may be able to lower premiums without sacrificing coverage.
Start by getting quotes from at least three different insurance companies. Look for insurance providers that offer competitive rates and discounts for things such as home security systems, a new roof or a favorable loss history. Online tools can quickly provide you with multiple quotes to compare, or you can work with an agent.
2. You Need Different Coverage
If you're not getting the coverage you need, it may be time to switch to another insurance company. Whether you have a home-based business, own high-value items like jewelry or antiques or live in an area with specific risks, your insurance policy should reflect these factors to provide adequate protection. (Note that you may need additional coverage if your area is prone to natural disasters such as floods or earthquakes.)
Basic homeowners insurance covers the structure of your home, damage to your personal property and liability costs if someone is injured in your home. But you may need more coverage in certain areas based on your home's individual needs. Insurers offer add-ons or things such as water backup or additional personal property coverage. Some companies even offer inflation protection benefits, which automatically adjust your coverage limits each year to keep up with inflation rates.
Depending on the insurer, certain types of coverages may be included in a standard policy or may be more affordable to add on. If you need the coverage and you can get it with another insurer for a reasonable price, this could be a solid reason to switch.
3. You Want to Reduce Your Premium
Even if your insurer doesn't raise your rates, they may not be willing to reduce your insurance costs to a more affordable premium. If you've had an income reduction, such as a job loss, or have increased expenses due to unforeseen circumstances, you may need to find an insurance provider that can offer a better price.
Keep in mind that many home insurance companies offer a range of discounts on premiums for those who qualify. Common discounts include:
- Remaining claims-free for a certain timeframe: Some insurance companies offer a discount on your premium if you don't file a claim for a specific timeframe such as one or three years.
- Newly purchased or newly renovated home: If your home is newer and built with better-quality materials, insurers may see this as a lower risk and provide an insurance discount.
- Recently replaced roof: Replacing your roof helps shield your home from perils that could damage your house. This can help you lock in a lower premium especially if you live in areas that are prone to storm damage like Florida.
- Safety and protection devices: Smart home devices, like thermostats, smoke and leak detectors and a security system, can make your house safer and can earn you policy discounts.
- Smart home technology: Nationwide is one insurer that offers a discount to customers through its Smart Home Program, which provides smart home devices that are activated remotely and can help protect your home from water damage.
4. You're Unhappy With Your Current Provider
Another reason to change your homeowners insurance is if you are unhappy with your current provider. Maybe you've been unable to reach someone in customer service when you really needed assistance. Or perhaps you filed a claim and feel the insurance company handled it poorly and didn't follow up properly.
Issues with customer service or communication can be frustrating. You should be able to rely on your insurance provider, especially in times of need. If you're not receiving timely or personalized attention, it may be time for a new provider.
Research potential insurers to gauge the responsiveness of their customer support. Online reviews and ratings can also be very telling. J.D. Power is a trusted resource that presents customer satisfaction ratings for insurance companies based on factors such as:
- Billing process and policy information
- Claims process
- Customer interaction
- Policy offerings
- Premium amount
These ratings are just a guideline, but can provide helpful insight as you narrow down your options.
5. You've Made Changes to Your Home
If you've recently made significant updates or renovations to your home, such as adding a new roof, building an addition or installing a pool, it's essential to review your homeowners insurance policy. You may qualify for discounts—or, some changes may affect your policy's coverage and require separate policies.
Renovating your kitchen to one with modern appliances and materials may add more value to your home, for example. But it can also raise your insurance rates due to the added coverage needed to replace your home.
Always communicate these changes to your insurance provider to ensure proper coverage and avoid any surprises in the event of a claim. This is also an ideal time to reassess your insurance to see if another insurer can provide better coverage to accommodate the changes you made.
6. You Want to Bundle Home and Car Insurance
If you have other insurance policies, such as auto or life insurance, consider "bundling" them with your homeowners insurance to potentially save money on premiums.
Progressive, for example, says customers can save an average of 7% when they bundle home and auto insurance policies. But before bundling, it's important to make sure the coverage you'll receive meets your needs and requirements for your home and your budget.
How to Switch Your Homeowners Insurance
With a clear plan, switching your homeowners insurance can be a straightforward process. Here are some steps to follow.
1. Assess Your Current Policy
If you haven't done so already, this is an important place to start. A deep dive into your policy is necessary to understand exactly what's covered and what's not. Make sure you're familiar with the limits and deductibles for each type of coverage, as well as any endorsements or riders that may be in place.
Pay attention to any exclusions that could leave you vulnerable to financial loss. For example, if you've acquired high-value items since you first took out your policy, you may need additional coverage.
2. Gather Necessary Information
Knowing when your current policy expires is crucial. You don't want to have a gap in coverage, so be sure to time the switch so that your new policy takes effect directly after your old one ends.
You'll also need to provide details about your home, such as its age, construction type and any safety features it includes. Personal information about the people who live in the home, like their ages, may also be necessary for the quote process.
3. Compare Insurance Companies and Quotes
Look for multiple carriers and weigh the different coverages and pricing options. Don't just focus on the premium cost: Consider the value of what's covered, the claims process and any additional perks offered by the insurer. Remember, third-party reviews and ratings can be a helpful way to gauge the level of service and satisfaction with a company among their existing customers.
Most insurance companies allow you to get a quote easily online. Take the time to analyze and compare the quotes you gather. Consider whether the deductibles and claim limits of the new policy suit your financial needs. A policy with lower premiums may also mean sacrificing critical coverages, so keep that in mind.
This is also a great time to compare which discount options you may qualify for and other incentives, such as if the insurance company has a loyalty savings to keep your premiums lower if you keep your policy for a few years.
4. Start Your New Policy Before Canceling the Old One
Once you've selected a new policy and insurer, it's time to cut ties with your current one. In many cases, a simple written notice or a phone call will work. Include the date you want the cancellation to take effect so your insurer can adjust your renewal premium accordingly, and ask about any refunds for the unused portion of your current policy.
Always ask for written confirmation that your policy has been canceled. This can be important documentation to have on hand should any billing or coverage issues arise in the future.
The Bottom Line
Your homeowners insurance is there to protect you and your assets. In the event of a disaster, theft or accident on your property, this type of insurance can help cover the costs of repairs and replacements. Switching your homeowners insurance is a proactive step that can save you money and time while also avoiding issues in the future.
When comparing coverage options and pricing, be sure to consider not just the cost of premiums but also the value of what is covered, the claims process and any additional perks or discounts offered by the insurer. Your credit score can also impact insurance rates in some states, so consider getting your credit score for free with Experian to see where you stand and improving your credit if necessary.