Changing Homeowners Insurance not that Bad

If you own a home, it is quite possible you may at some point become dissatisfied with your insurance company. This is usually after you file a claim, say for a hail storm, and do not find the settlement satisfactory. Or perhaps they goof up your payments, which is always frustrating.

First, determine if it’s worth it. An emotional reaction to a rude inspector or a low-ball claim may not be reason enough to change. How do you know the new company will be any different? On the other hand, repeat offenses are a red flag for a new course of action.

Rule number one to remember is cheaper may or may not better. All insurance companies exist to make money and provide a useful service to you; they are not going to intentionally take a loss.

There are several ways they can accomplish lower rates. One is to raise their standards so claims are likely to be fewer. Or they may use the Wal-Mart concept of higher volume (more customers) and thus a lower price for each. Perhaps the initial premium is lower but add-ons you need run up the cost. Some who don’t advertise much save millions and perhaps pass on the savings. Lastly, they can scrimp on claims which is shameful and probably the biggest reason people become unhappy.

When you contact prospective companies for a quote, you will be asked all about your home’s construction, its age, your furnishings, security system (if any), what type of fire protection you have, etc. Sometimes they can get this information from your current policy but insurance companies usually don’t work together when clients change brands.

Watch out for hidden clauses which reduce your coverage. A trampoline, an above-ground pool, a guard dog; anything that might raise your risk is an issue for most companies. So when you change insurance providers make sure such items are not prohibited or excluded from protection, or you may be in for an unpleasant surprise. Some companies actually send photographers to your home looking for any extra-risk items before (or after) approving you; be honest about what you have as this is always best.

Most homeowner’s policies will have further exclusions or limits on guns, collectibles such as artwork, coins, antiques, computers, jewelry, etc. Don’t let the price lure you in until you know what that covers. You can often purchase a separate personal articles policy to cover that diamond ring or coin collection and these policies are usually quite reasonable.

After you’ve chosen the new company, you need to get an insurance binder from them and have it sent to the mortgage holder. The dates must seamlessly transition so there’s no risk of a lapse. (It’s likely the mortgage co. will demand this anyway.) This fulfills the loan requirement that you have continuous insurance. You may have to pay a deposit into escrow (or against the yearly premium if you do it yourself) when you change. It may set you back a few hundred bucks (depending on your home’s value, perhaps more than that), but it’s a wash in the end. Naturally, if the new premium is higher then you’ll be out the difference.

If you own your home outright then this step is of course eliminated, and you can probably just pay monthly after an initial deposit. Sometimes you have to pay the first year in a lump sum, though.

You’ll find that the insurance company you are moving to will walk you through all the steps because they want the business. Don’t be afraid to ask lots of questions! If you feel intimidated ask to speak to someone else or move on down the road.

The bottom line is it might be a bit inconvenient and annoying to jump through the hoops as they ask, but it’s not as bad as you might have been led to think. Just make sure it’s worth it.