Q

Q

How often should you re-shop your homeowners insurance?

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A

You should shop around for homeowners insurance on an annual basis to make sure you’re not missing out on a better deal with a different company.

Pat Howard 1600

Pat Howard

Published April 22, 2020

KEY TAKEAWAYS

  • If you notice your mortgage payment went up, it may be because of your homeowners insurance

  • Your homeowners insurance company should inform you of any changes to your rates at policy renewal

  • You should re-shop your homeowners insurance annually to compare policy cost and coverage with other insurance companies

  • Re-shopping home and auto insurance saves Policygenius customers an average of $690 a year

Homeowners insurance is a type of financial protection that people often forget about after buying a home. Insurance premiums are occasionally included in your monthly mortgage payment along with principal and interest, property taxes, and mortgage insurance — for some, homeowners insurance is a “set it and forget it” type of thing.

But did you know that you should re-shop your homeowners insurance policy annually? If your premiums went up more than 10% at renewal, you’ll likely find coverage at a lower rate if you shop around and compare policies from multiple insurance companies. If your rates didn’t increase that much, consider re-shopping anyway to see if you’re missing out on a better deal with a different company.

In this guide:

Why you should shop around for homeowners insurance every year

It’s become increasingly common for companies to reevaluate rates and change the cost of policies on an annual basis. The industry is operating with tighter-than-ever margins in recent years due to record insurance payouts from wildfires and other climate change-influenced catastrophes. As a result, it’s likely your premiums will go up, too.

If your premiums jumped more than 10% (for example, $1,000 to $1,100), consider re-shopping your policy to see if you can find a lower rate with a different company. Shopping around and comparing policies could save you hundreds of dollars on coverage annually.

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What’s the best way to re-shop?

When you re-shop homeowners insurance, you’ll want to make sure you’re casting a wide net and evaluating policy cost and coverage from both large and small companies. The best way to do this is by working with a broker, or independent agent who works with multiple insurance companies. But be sure to find out upfront how the broker is compensated — it’s possible they’re earning a commission for selling policies from a particular carrier with subpar coverage.

Common misconceptions about changing insurance companies

Re-shopping is only about lower rates

Re-shopping homeowners insurance shouldn’t always be about lowering the cost — you’ll also need to re-shop if your policy is being nonrenewed or if a particular peril is being excluded in the upcoming term.

The industry’s declining profit margins have led companies to take on less risk in areas where disasters or insured losses are common. Many insurance companies in California, for example, will exclude wildfire damage from coverage or are no longer insuring homes in wildfire-prone areas altogether. Wind and hail exclusions in coastal areas and roof exclusions are also not uncommon.

If you were recently notified of a policy exclusion at renewal or you find that your home is insured for below its replacement cost, compare your coverage with other policies and see if you can find more comprehensive protection elsewhere. If you have to pay a little more to ensure your home is fully covered, it’s probably worth it.

Sticking with the same company gets you lower rates

A common misconception about insurance is that sticking with the same company means lower rates. In some cases, that might be true. Maybe you’re a long-term customer receiving a loyalty discount or multi-policy discount for bundling your home and auto insurance. But it’s also possible that those discounts are being offset by the high initial rate you’re paying for coverage.

Re-shopping takes too much time

In a survey from Policygenius last year, we found that the biggest reason policyholders don’t re-shop is because they think it takes too much time. In reality, that couldn’t be further from the truth. If you have your existing policy’s declarations page on hand, re-shopping can take as little as five minutes.

Consider re-shopping your homeowners insurance with Policygenius to get expert advice, quotes from multiple insurance companies, and an impartial coverage recommendation. Our agents will help you select a policy that’s right for your home, handle all of the paperwork, and switch your coverage.

About the author

Insurance Expert

Pat Howard

Insurance Expert

Pat Howard is an Insurance Editor at Policygenius in New York City, specializing in homeowners insurance. He has been featured on Property Casualty 360, MSN, and more. Pat has a B.A. in journalism from Michigan State University.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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