How to Switch Homeowners Insurance Providers in 8 Easy Steps

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Switching homeowners insurance providers may seem intimidating. Why is that? Because you’ve never done it before? Because you don’t know what’s involved? Because you’re not sure where to begin?

Let’s fix that. Because switching homeowners insurance providers is so much easier than you think.

In overview, here are the eight tantalizingly simple steps, as well as the basic level of effort for each:

  1. Understand your current coverage. Get down a few key numbers from your existing policy so you know what you’re comparing.
  2. Compare coverage options. Using Covered, this bit can take as little as five minutes.
  3. Purchase a new policy and agree on the effective date. We’ll make this fast and painless, too!
  4. Cancel your old policy (as of the effective date). A five-minute phone call, and possibly a simple cancellation notice sent by email or snail mail.
  5. Notify your mortgage provider. Another five-minute phone call.
  6. Ask for an escrow analysis. You guessed it — one more five-minute phone call.
  7. Deposit any refunds. This one depends on your situation, but it’ll likely either involve mailing a check or stopping by one of your mortgage provider’s branch offices.
  8. Feel SO FREAKING SMART. For exactly as long as you like.

1. Understand Your Current Coverage

Even if you’ve already decided you’re going to make a change, it’s helpful to take a moment to make sure you understand your current coverage. After all, what’s the point of switching if you’re not sure you’ll get the right coverage for the best price?

The truth is that you may have more or less homeowners insurance coverage than you genuinely need. If your coverage limits are too high, you’re paying for coverage you’ll never be able to use. If they’re too low, you could find yourself unable to repair or rebuild in the event of damage by a covered peril.

That’s exactly why you should start by taking a quick look at your current policy coverage. Specifically, look at your homeowners insurance policy’s:

  • Deductible and annual premium. You’ll find these numbers on the “Declarations” page, which is usually in the first page or two of your homeowners insurance policy. You’ll want to have these numbers in mind when comparing your current coverage with your new quotes.
  • Coverage limits for Coverage A, Dwelling, and Coverage B, Other Structures. Are they appropriate to cover replacement cost for your home and other structures?
  • Coverage limits for Coverage C, Personal Property. Do you have replacement cost or actual cash value (ACV) coverage?Do you have any valuables that may exceed your coverage limits?
  • Section I Additional Coverages, Perils Insured Against, and Exclusions. Are you covered for all perils that could damage your home? Covered perils vary from policy to policy. It’s also helpful to be aware of common exclusions to homeowners insurance policies.

If you’ve got questions about your limits for the rest of the coverage types — Coverage D, Loss of Use; Coverage E, Personal Liability; and Coverage F, Medical Payments to Others — it’s best to consult with a licensed insurance agent or advisor. They can advise you on appropriate coverage limits in each area by asking you questions specific to your situation.

2. Compare Coverage Options

Now that you’ve got a proper handle on the coverage you have, you’re better equipped to assess the coverage you want. That means you’re ready to request new homeowners insurance quotes.

That’s exactly where Covered can help. Our easy online quoting tool gets you customized quotes in minutes. Our best-in-class UX makes the process of insurance shopping fast, painless, and rewarding. Even better, we’ve got licensed expert insurance advisors — all in-house, right here in our home state of Colorado — available via chat or phone to answer your questions and help you make the right choices.

3. Purchase a New Policy and Agree on Effective Date

Whether you’d like to purchase a new homeowners insurance policy right away or you want time to consider your options, Covered’s advisors will be ready when you are. They’ll be happy to help you adjust coverage limits, consider whether you should bundle coverage, or weigh the pros and cons of different policies or deductibles. When you’re ready to purchase, you can give us a call or complete the process 100% digitally via chat. (If you have a mortgage, have a recent statement handy for this part.)

When you sign up for new homeowners insurance coverage, you’ll choose an effective date. That’s the date your new policy becomes effective. Figure out what makes sense for your needs and finances. You can schedule it for the next day, the next month, a couple weeks out, or even on the exact day your existing policy is set to renew. The most important thing to remember when choosing your effective date? You shouldn’t go even a single day without homeowners insurance coverage. (More on that in step #5.)

If you own your house outright, you’ll need to arrange payment for your homeowners insurance premium at this time. If you have a mortgage, see step #5 for payment information.

The last important bit? Signing your new policy documents, of course. Most likely, you’ll e-sign them. Your Covered advisor will let you know when to expect them in your email inbox, as well as when you need to sign them by.

4. Cancel Your Old Policy (as of the Effective Date)

It’s time to let your current homeowners insurance provider know you’re cancelling. For some insurance carriers (and in some states), a phone call or email is sufficient. Sometimes, written notice is required.

How do you find out what’s necessary for your insurance carrier? We recommend simply calling them, asking what they require. That way:

  • If they only need a phone call, you can take care of it right then and there. Tell them, “I would like to cancel my homeowners insurance policy effective [name your effective date].”
  • Once you’re on the phone, you can ask what happens if you’re owed a refund. Ask, “If I’m due a refund, will you send it to me or to my mortgage provider?” This will be important later (#7).
  • If they say they require written notice:
    • Ask for the email or mailing address to which the cancellation notice should be sent.
    • You may be able to download a cancellation notification template from your old or new insurance carrier. Many carriers offer such templates. Or you can use our Insurance Cancellation Form we’ve made just for this reason!
    • If not, you can write a simple message from scratch that includes all of the following:
      • Your name and contact information
      • Your policy number
      • The insured address
      • Your mailing address (to which they can send any refund due)
      • This statement: “I would like to cancel my homeowners insurance policy effective [name your effective date]
    • As required by your insurance carrier, email or mail your cancellation notice to the address they provided.

5. Notify Your Mortgage Provider

If you already own your home outright, skip straight to step #9, you fortunate human. If, like most of us, you still make mortgage payments, it’s time to notify your mortgage provider.

Most homeowners with mortgages have escrow accounts. Your monthly mortgage payments also fund your escrow account, which your mortgage provider uses to pay for property taxes and homeowners insurance on your behalf. The arrangement helps you ensure you’ve always got sufficient money set aside for these costs. It’s also why your mortgage provider needs to know ASAP if they’ll be paying a different insurance carrier and amount going forward.

Friends, this step is crucial. Your mortgage provider has the legal right to purchase homeowners insurance on your behalf if they determine your coverage may lapse. It’s called lender-placed insurance, and you don’t want it. It’s expensive, and it’s not necessarily focused on your best interests. So don’t put off making this call. After all, these calls are commonplace for your mortgage provider, so they should be able to take care of you quickly.

Your monthly mortgage statement will provide you with the right number to call. You’re calling to let them know about the change, answer their questions, and ask a couple of questions of your own. So when you call, have the following handy:

  • Your mortgage loan account number
  • The name and mailing address of your current homeowners insurance carrier, as well as your current policy number
  • The name and mailing address of your shiny new homeowners insurance carrier, and your new policy number
  • The date your new policy will be effective
  • The amount of your new homeowners insurance premium

Before you hang up, you’ve got two logistical questions to ask:

  • Ask your mortgage provider how your new homeowners insurance premium will be paid. Most likely, your mortgage provider will say that they’ll send a check to your new insurance carrier on your behalf. But you need to be sure, in case you’re responsible for paying your new carrier directly.
  • If you’re anticipating a refund from your current homeowners insurance provider, ask your mortgage provider how you should get it to them. They may ask you to mail it to them or bring it to a branch office to deposit it.

6. Ask for an Escrow Analysis

A few business days after you alert your mortgage provider of the changes to your homeowners insurance policy, it’ll be time to call them again. This time, you’re calling to request that they conduct a new escrow analysis.

Your mortgage provider conducts an escrow analysis every year to assess whether you’re paying the right amount into your escrow account. A change to your homeowners insurance premium changes their calculations. If your premiums will be lower, you’ll be overpaid. If your premiums will be higher (e.g., maybe you’ve added important coverages to cover gaps you identified), you’re likely to be underpaid.

Of course, you can mention the escrow analysis when you contact them about your policy change. However, they’re likely to ask you to call back in a few days. Their systems need time to process your new information before they can complete an accurate analysis.

If the new escrow analysis shows you’ll be overpaid, your mortgage provider will talk to you about options. They’re likely to recommend that the overpayment be credited toward your mortgage, which is a great option. Who doesn’t love a suddenly lower mortgage payment?

7. Deposit Any Refunds

Remember when you asked your current existing homeowners insurance carrier whether a refund (if owed) would be sent to you or to your mortgage provider? Here’s why you asked. If your carrier indicated that they’d send the refund directly to your mortgage provider, proceed to step #8.

If the refund is sent directly to you, it will most likely arrive as a paper check via mail. You should deposit it into your mortgage escrow account as soon as possible.

Hey, remember when you asked your mortgage provider how you should get them the refund check? (Aren’t you the proactive one!) Do that, and you’re done.

8. Feel SO FREAKING SMART

Do we really need to include this last step? Yes, we do! After all, true adulting wins are sometimes few and far between. So, having taken the time to make sure you’re getting the right homeowners insurance coverage at the best price, it’s time to celebrate. You did it! You figured it out, and you made it happen! Now that wasn’t so hard, was it?

Ready to get started on making the switch? We’d love to help. Get your customized quotes today, send us a message, or talk to one of our independent advisors at (303) 302-9927.

Cover Photo by Tierra Mallorca on Unsplash

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