You buy a new mattress every seven years and a new toothbrush every three months. You shop for new running shoes after putting 500 miles on your last pair. You buy airplane tickets on Tuesdays and a new flatscreen TV on Cyber Monday. For a lot of products, there are guidelines regarding when, how often, and how to shop (or re-shop) for them.
When it comes to insurance, it’s not as clear to most folks when and how to go about it. For car insurance, it’s smart to compare rates every six months or a year, and there are certain life events like moving or getting married which also necessitate a change in policy or a need to find a new insurance company.
But when should you shop for home insurance? We’ll walk through a few key reasons and occasions you may want to shop for or change your homeowners insurance policy and make sure you have the resources you need to do it.
1. When buying a home (obviously)
When buying a home, it’s critical to protect your investment. This is especially true if you will have a mortgage on the home (which nearly all homeowners do) as the bank providing the loan will also want to make sure their investment is protected.
You will need to secure a home insurance policy before you close on the home. Since you haven’t actually moved into the residence, though, you may not know everything about the home necessary to get an accurate quote. The quoting process for homeowners insurance can vary by company, and you will need to have an approximation of the value of all the personal items that fill your home (clothes, furniture, electronics, etc.) to make sure they will be properly covered by a policy.
(See our guide for what you need to know before getting homeowners insurance for more details.)
2. When the value of your property changes
A large part of the coverage for your home is based on the value of your property, whether that means the house structure, land, or possessions that fill the property.
After making renovations to your home
Considering a kitchen upgrade, finishing the basement, or adding a wing to make room for kids? Many people, especially those that bought a “fixer-upper,” make expensive renovations and upgrades to their home after they move in. These renovations can make a huge difference in the aesthetics, comfort, and functionality of your home.
Something that is easy to overlook, however, is that renovations can significantly increase your property value and cause your home to be underinsured. We always recommended that you notify your insurer of any large updates you make to your home to make sure you have sufficient coverage.
The same can be said for adding additional structures on your property. Building a gazebo or large storage shed can affect your property value just like a major renovation. You will want to ensure that those new structures are properly covered by your policy.
It’s important to note that your home insurance rates may increase as a result your renovations. Fortunately at this point, you likely have a solid understanding of all the details of your home, which would making the insurance quoting process much easier. You are not stuck with your original insurance provider, so if you find a new company willing to provide sufficient coverage at a better rate, switching home insurance companies might be a good idea.
After buying expensive items
Since your personal property (read: all of your stuff) is also covered by homeowners insurance, purchasing high-dollar items, such as a new set of golf clubs or fine china, can cause the value of your personal property to increase. Obviously you want to make sure those expensive items are properly covered, and it may be necessary to insure those items individually on your policy.
If adding valuable items to your policy causes your insurance rate to increase substantially, then it’s probably time to check out what other insurers would offer for the same coverage. At the very least, shopping around will help you determine if you’re getting the best deal or not.
3. When your home insurance rate increased for no apparent reason
Just as with auto insurance, homeowners insurance premiums are impacted by things that are out of your control. Severe weather events, increases in crime, and rising business costs can cause insurance companies to raise rates – even if you have not filed a claim. These rate increases often occur at the time of your policy renewal, and if you’re making your insurance payments through escrow because of a mortgage, you may not even realize that your rate went up. It is important to review your policy at every renewal period to ensure you are aware of any changes.
Just because your rate increased, however, does not mean that your premium is no longer competitive. The only way to know for sure is to get quotes with other companies. You may find that your rate is still the best value for the coverage you’re receiving, or you may find a company willing to offer a more competitive rate for the same level of coverage as your existing policy. Since insurance quotes are free, looking around to shop for home insurance after a rate increase is a no-brainer.
4. When you switch car insurance companies
Because many auto insurance companies also offer coverage for homeowners insurance, you may be eligible for additional discounts if you wish to bundle both policies with the same insurance provider. So if you’re hoping to shop for home insurance while looking for car insurance, you might consider comparing quotes with bundled policies.
Now, bundling policies may not be for everyone. A few things to consider:
- You will still need to provide details about your home just as you would with any other company. (Make this process easier by having your existing home insurance policy in front of you.)
- It could be more difficult to switch companies down the road if you have a bundled policy and the payment dates for your home and auto policies don’t match
- Some insurance companies will use a third party to underwrite additional policies, so while you might think you’re getting coverage from the same company, you may not be.
5. When you’re unhappy with how your insurance company treats you
Finding out that you aren’t covered after you’ve had a loss is a horrible experience. Most insurance companies do their best to avoid unexpected surprises when it comes to claims, but in certain cases it is unavoidable. If you find yourself in a situation where you don’t feel comfortable with the details of your policy, had a bad customer service experience, or can’t get a straightforward answer to your questions, it may be time to start shopping for a new company.
Your home insurance company should be friendly, knowledgeable, and make you feel confident that they will protect you and your (likely) largest asset. There are many options for home insurance if you’re looking for a new provider. Use resources like Consumer Reports and J.D. Power to see how insurance companies rank for customer satisfaction, and check A.M. Best to ensure the company is financially strong enough to pay in the event that you file a claim.
6. If your insurance company goes under
There are also instances where you may find yourself in need of a new homeowners insurance policy that are completely out of your control. What if your insurance company goes out of business or becomes insolvent? While it’s best to avoid working with insurers with low financial strength ratings in the first place, sh*t happens, so in those cases, you’ll need to find coverage as soon as possible.
7. If your insurer drops you as a customer
Yes, they can do this – but of course it depends on the circumstances. In the event that you are dropped by your insurance provider, it’s a good idea to find out the exact reason(s) why. Knowing this can help you find a new company that is willing to insure you even with a less-than-stellar claims record. Dates and amounts paid out are important so write them down, keep a record of the claims, or simply order a CLUE report to make the shopping process easier.
Don’t leave yourself uncovered. It’s easy to shop for home insurance!
Regardless of your reason for shopping around, ensuring your home is adequately covered will help you avoid a hefty bill that might have otherwise been paid for by your insurance company. Ask questions during the quoting process and make sure you feel confident and informed so you can find the coverage and policy that is right for you. If you need help, you can always ask an agent.