Homeowners insurance is often paid for the year up front. So if you sell your house or switch companies before your current policy expires, you’ll need to cancel it to get reimbursed for any unused premiums.
Canceling homeowners insurance can be as simple as contacting your insurance provider and filling out a brief cancellation form. But before making it official, make sure you have another policy lined up so you aren’t leaving yourself without coverage for any period of time. If your house is damaged and you don’t have homeowners insurance, you’ll have to pay for repairs out of your own pocket.
5 steps to canceling your homeowners insurance
Follow these steps to cancel your home insurance policy and switch to a different company:
Compare quotes from multiple companies and confirm your new policy.
Give your current home insurance company a heads up.
Provide your insurance company with necessary documentation.
Notify your mortgage lender.
Look out for your premium refund.
1. Compare quotes from multiple companies and confirm your new policy
If you’re not happy with your policy or you’re facing a steep rate hike at renewal, re-shopping your homeowners insurance with Policygenius can be a good way to find better and cheaper coverage. When you’re ready to buy, our agents can help you compare quotes with multiple top companies, handle all the cancellation paperwork, and notify your mortgage lender of the switch.
Once you officially decide to change your homeowners insurance, you’ll want to confirm a few things before contacting your current insurance provider to cancel.
Ensure your new policy has an effective date, which is when your coverage will become active. This will be helpful for setting a cancellation date on your current policy.
Confirm that your new insurance company has received your first home insurance premium payment. Once the payment is processed, your new policy is set to take effect and you’re safe to cancel.
Ask about any pending exterior inspections of your home. If your new policy is contingent upon a passed roof inspection in the first 30 days of your term, you may want to keep your current coverage in effect until you’ve passed the inspection.
Keep in mind that many insurance companies backdate policy cancellation if you don’t cancel until after your new policy has taken effect. In other words if your new policy starts on May 1, but you don’t cancel your old one until June 15, you could still be refunded according to a May 1 cancellation. Some insurers will backdate policy cancellation for up to one year.
2. Give your current home insurance company a heads up
Once you’ve confirmed your new homeowners insurance policy, contact your current insurance company and let them know you plan to cancel. They’ll likely send you a form to specify the details of your cancellation.
While cancellation fees are rare, some smaller insurance providers will charge a small processing fee for canceling early. And some may only apply a fee if you cancel within the first two months of your policy.
3. Provide your insurance company with necessary documentation
Your current insurance company will likely require a written notice to cancel your policy and process any refunds. Your agent may give you a specific form to fill out. Otherwise, you’ll need to send a simple letter with the following information:
Your full name
Address of the insured home
Your phone number
Your policy number
The date and time of policy cancellation
Your new insurance company
Your new policy number
Your new policy’s start date
If you sell your house or move, you’ll need to cancel your homeowners insurance
Contrary to popular belief, your homeowners insurance generally doesn’t cancel automatically with your mortgage when you sell your house. Once the sale is official, contact your insurance agent to cancel your homeowners insurance. You’ll likely need to provide them proof of the sale date so your insurance can be canceled as of the date the property is transferred to the new owner.
4. Notify your mortgage lender
Mortgage lenders are usually listed as a loss payee on homeowners insurance policies since they have a financial stake in the property. This means if you switch companies, your insurer may notify your lender on your behalf. But to be on the safe side, it’s a good idea to reach out to your lender yourself.
This is especially important if your homeowners insurance is being paid through an escrow account. If you change companies, your lender will need to instruct the escrow company to stop making payments to your old insurer.
5. Look out for your premium refund
Homeowners insurance is usually paid monthly or annually. If you pay for the year up front and you cancel before the year is complete, you’ll be entitled to a refund.
Most insurance companies calculate your refund amount on a prorated basis. This means they divide the number of days left on the policy by the total number of policy days, and multiply it by your premium amount. For example, if you have 90 days left on a one-year policy, you would be refunded about 25% of your annual payment.
If you’re moving, be sure to tell the insurance company so they send your refund check to the correct address.
Frequently asked questions
Can I cancel homeowners insurance at any time?
Yes, homeowners insurance can be canceled at any time, and you also have the right to a policy refund when you cancel. Most major insurance companies prorate refunds, meaning you can cancel at any time and get reimbursed for any unused policy premiums. But on the rare occasion, smaller mutual insurance companies may charge a financial penalty called a short rate cancellation if you cancel your policy before the policy’s expiration date. This penalty is typically 10% of the annual premium.
When should I cancel homeowners insurance after selling my house?
Your policy cancellation date should coincide with the home’s transfer of ownership. Once the sale is official, the home is no longer yours to protect. To find the official proof of sale date, check the purchase agreement or bill of sale on the home.
Can I cancel homeowners insurance altogether?
Yes. If you bought your home outright or your mortgage is fully paid off, you can legally go without homeowners insurance. However, keep in mind that if you don’t have homeowners insurance and your home burns down or you’re robbed, you’ll have to pay to replace everything out of pocket or stomach the loss.