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Insurance

How to switch homeowners insurance in six simple steps

Save yourself some stress (and maybe money) by following these steps when switching insurance.

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Whether you're looking to save money or simply unhappy with your homeowners insurance company, you can switch providers at any time. That said, you want to follow the right steps to ensure you get the financial protection you need and avoid a lapse in coverage (and its resulting consequences). Below, CNBC Select explains the step-by-step process of switching homeowners insurance companies.

Guide to switching home insurance

1. Assess your insurance needs

Before you part ways with your current insurer, it's a good idea to think about what you want from your new coverage.

Review your current policy. Check its limits, exclusions and deductibles. See what your home insurance covers, including any add-ons. This is your starting point — now you can think about whether you want your new policy to look the same or if there's anything you want to add or remove. For example, if you've acquired some expensive art or jewelry since you last signed a policy, you might consider adding some scheduled personal property coverage which raises your payout limits for valuable property.

This will also help you when you get a quote from a new potential provider. If you don't pay attention, it might seem as though you're getting a great deal because your new premium would be much lower. However, that's not the case if the new policy would leave you with significantly less coverage than your previous policy. The opposite is also true: more expensive coverage might be worth it if it provides better financial protection for your home.

2. Do your research

Researching homeowners insurance may not be your idea of a good time, but paying expensive premiums for a policy that doesn't fit your needs is even worse. Pick a couple of companies to research — you could ask family and friends who they use, or take a look at our list of best homeowners insurance providers for inspiration on where to start.

Additionally, it's helpful to look into various ratings, such as customer satisfaction ratings from J.D. Power. For instance, Erie Insurance is J.D. Power's best company for property insurance claims satisfaction in 2023. USAA received the second-highest score but didn't make the list since it only offers insurance to military members and their families.

Erie Homeowners Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Maximum coverage

    Not disclosed

  • App available

    Yes

  • Policy highlights

    Erie Insurance offers homeowner's insurance coverage in 12 states and offers some unique coverage features, including things like gift card reimbursement, which covers gift cards for companies that have closed, as well as coverage for animals, birds and fish up to $500, and coverage for hard-to-replace items like accounts, bills, and passports.

  • Does not cover

    Flooding and earthquakes, identity theft, high-value items (these can all be purchased as add-ons for extra coverage)

USAA Homeowners Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Maximum coverage

    Not disclosed

  • App available

    Yes

  • Policy highlights

    Policy covers most weather-related damages, theft, vandalism, sudden and accidental water damage and mold. Also covers personal liability, personal belongings, dwelling and other structures and loss of use

  • Does not cover

    Flood insurance, water damage and mold that has built up slowly over time, high-value personal items

Terms apply.

Other ratings you can look up are Complaint Indexes from the National Association of Insurance Commissioners (NAIC) and financial strength ratings from AM Best and Standard & Poor's (S&P).

3. Figure out the timing

Now that you know what kind of coverage you want and which companies you're considering getting it from, you're almost ready to buy a new policy. But first, you should determine when your current coverage ends.

If you terminate the coverage before the end of the policy term, your insurer may charge you a cancellation fee (depending on their policies). Further, if you cancel the existing policy before the new one begins, you'll likely have a lapse in coverage. This is something you want to avoid — lapses can lead to higher insurance premiums down the line as your next insurer may view the lapse as a sign of financial instability. Plus, should something happen to your home, you'll have to pay out of pocket if your coverage has lapsed. Not to mention, your mortgage servicer might buy lender-placed insurance on your behalf and add the premium to your monthly mortgage payment.

For these reasons, whether or not you're canceling your policy before its term ends, you want your new policy to begin on the same date the current one is terminated.

4. Compare quotes and purchase new coverage

Take the most promising candidates from your research into insurance providers and start calling them to gather quotes. Even if you're planning to bundle your homeowners insurance with your current auto insurance provider (for example), we recommend not to skip this step. Bundling often results in savings, but that's never guaranteed — a different carrier might still offer a lower premium for the same amount of coverage.

If savings are your goal, look into Nationwide which CNBC Select picked as the best overall cheap homeowners insurance. The insurer provides a few discount opportunities and lets you easily manage your policy online.

Nationwide Homeowners Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Maximum coverage

    Not disclosed

  • App available

    Yes

  • Policy highlights

    Policy covers home and property damages caused by theft, fire and weather damage. It also covers personal liability, loss of use and unauthorized transactions on your credit card

  • Does not cover

    Water damage, earthquakes, flood insurance, identity theft, high-value items, rebuilding home after loss (these can all be purchased as add-ons for extra coverage)

Terms apply.

Once you have picked an insurer, you can purchase your new policy. To do that, you need to know how to list your mortgage lender correctly. This includes your lender's official name and the address where your policy documents will be sent. Note that this is typically different from the name and address where you send your mortgage payments, so you should call your lender to get this information. After that, you're ready to buy your new coverage.

5. Cancel your old policy

With the new policy secured, it's time to let your current insurance carrier know you're terminating your policy. Besides asking for the cancellation date, the insurer might request that you sign a cancellation authorization form.

When canceling your coverage on the date of its renewal, you won't get a refund because you have already used all the time your premium entitled you to. On the bright side, you also won't owe any cancellation fees. But if you terminate your policy mid-term, you could get some money back.

6. Notify your lender

Finally, make sure to update your mortgage lender as soon as you buy a new home insurance policy. While both your previous and new insurance companies should send your mortgage servicer the required documents, you'll probably still need to provide your lender with the cancellation date and the effective date of your old and new policies, respectively.

Additionally, you want to direct any refund from your old policy back into your escrow account. This ensures your lender has enough funds to pay for the new policy, so ask for instructions on sending the money when talking to your servicer.

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Bottom line

It's not difficult to switch home insurance and you can do so at any time. Yet, it's crucial to know the details of the process and follow the right steps to ensure you don't end up with a lapse in coverage or a shortage of funds in your escrow account. And of course, take the time to shop for a new provider to ensure you're getting a fair deal.

Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance guide is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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