Q

How often should you re-shop your homeowners insurance?

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.

Homeowners insurance is a type of financial protection that many people forget about after initially purchasing it for a new home. Insurance premiums are often included in your monthly mortgage payment along with property taxes and mortgage insurance — so 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.

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 $455 a year

How often can you change homeowners insurance?

There’s no standard rule for how often you must change your homeowners insurance, but it’s smart to re-shop your policy every year to make sure you aren’t missing out on a better deal elsewhere. In fact, Policygenius customers save an average of $455 a year from re-shopping their home & auto policies. 

You can cancel your policy or change insurers whenever you want — even in the middle of your term. Although you may incur a small fee, like $25, for canceling your policy early, most insurers will let you do this free of charge. If you’re planning on making the switch, make sure your new policy’s effective date lines up with your old policy’s expiration date so that you don’t have a lapse in coverage.

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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. 

What’s the best way to re-shop homeowners insurance?

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 insurer 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.

How often should you re-shop your homeowners insurance? FAQs

Does homeowners insurance go up every year?

It’s common for home insurance premiums to go up each year. Premium costs are based on a variety of factors, like your home’s age, location, and build. They’re also based on things outside of your control, like construction costs. For example, if you live in an area that suffered multiple natural disasters in a given year, you’ll likely see a rate increase due to the increased demand of construction costs. If you noticed your rates went up more than 10%, consider re-shopping your insurance to find a better deal.

Can I change my home insurance any time?

Yes, you can change insurers whenever you want. Just make sure you align your new policy’s start date with your old one’s end date so that you don’t have a lapse in coverage.

Can I change homeowners insurance if I have an escrow account?

Yes, however, you’ll want to make sure your lender is aware of the switch so that they stop making payments to your previous provider. The new insurance company will likely contact your lender directly to get the escrow payments set up on your behalf.

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