How to Change Your Homeowner's Insurance

People sometimes make financial decisions only to find when they change their mind; they don't know how to "undo" their decision. Selecting the most cost-efficient homeowner's insurance is one example, particularly when your mortgage company pays the bill. Every state has standardized base home-insurance policies. The difference in premium comes from the insurance company’s loss experience in your area, their return on investments and the cost of running the company. Any high expense or low return could increase your premium through no fault of yours – so it pays to compare.

Hunt for a new policy about two months before your homeowner's policy is due. It will take you that long to find a new one, get approval and switch the payment at your lenders. If you're paying the policy yourself, begin your search about six weeks before your premium's next due date.

Check for any extras added in your policy before changing any requirement your mortgage company has, such as the financial quality of the insurance company. Although the law requires a standardized minimum base, you might have a few extra riders on your policy such as replacement cost or higher limits of liability. Make sure you have an "apples to apples" lower-cost policy before beginning the switch.

Wait to confirm whether the insurance company approves you for the new policy and learn the actual price before you do anything else. Never try to change your policy at the last minute, hoping for the better price. You might end up with a higher amount once the company calculates the premium, rather than the agent. You also might experience not being insured for a short time if there's a delay.

Contact your mortgage company if it pays the bill. Call first and follow up in writing. Inform the company that you'll be changing coverage and not to pay your previous insurance company. Keep a copy of the letter for your reference. This way, if the mortgage company mistakenly pays the bill, it's responsible for the short premium. A short premium is a higher dollar amount per day you pay when you cancel a policy mid-term, which you'd have to do if the company submitted the premium.

Pay your new premium or make sure the mortgage company received the new company's premium notice if it's paying and a copy of the new policy, even if it's not paying. Confirm with the mortgage company that the new policy is in order before canceling your old insurance policy. Changing your homeowner’s insurance is a simple process but you must verify that your directives are implemented.


About the Author

Jay P. Whickson worked as an insurance rep, financial planner and stockbroker from 1979 until her retirement in 2007 when she began writing about the field of finance. Whickson has both a Bachelor of Science and a Master of Science in education from Indiana University. She also has post Masters courses in science and a number of different insurance and investment designations and degrees.