How to Buy Homeowner Insurance

Switching homeowner insurance is easier than it may seem, and well worth it. Make a change to better value!

Any homeowner knows the financial investment—and therefore time investment—that a home represents. But few have thought nearly as hard about their home’s insurance protection. Finding the right insurance means having all the coverages you need at the best price available.

Summary
  • You should pick an effective date for your new insurance policy at least a week in the future to allow time to cancel the current insurance company and issue payment to the new one.
  • All homeowners with a mortgage need to tell their mortgage companies about the change in insurance, even if they don’t use an escrow account.
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What is a homeowner insurance quote?

Homeowner insurance quotes represent the insurance companies’ offers to sell you protection for your home, other structures, your liability, and more.

Each company has a different formula for coming up with your quote, so the prices you see will vary quite a bit. Homeowner’s insurance quotes take into account the following information when considering your cost:

  • Your coverages
  • Cost of rebuilding your house
  • Age of your home
  • Type of materials your home is made of
  • Security features
  • Home improvements
  • Accessibility of local fire protection
  • Likelihood of natural disasters in your area
  • Crime rates in your neighborhood
  • Your credit score
  • Your pet(s)
  • Your belongings
  • A pool or trampoline at your house
  • The type of furnace in your house
  • Previous insurance claims

How to get a quote

You can get an insurance quote from a local insurance agent, online from an insurance company, or online from an insurance agency.

Insurance companies need several pieces of information about you and your home in order to prepare a quote for you. You will provide most of it, especially things like home updates or the presence of a trampoline. The insurance company will pull other information from public data, such as the year your house was built, the construction type, and your credit score. You have the right to not allow the insurance company to pull your public records, but they will usually deny to offer you a quote if you do.

The following information is some of what is needed when submitting your account to INSURANCE-MOD to create quotes for you. Most of this information is also needed for your auto insurance, so you will only need to be entering it once:

  • The date you purchased the house
  • Your social security number
  • The shape of your roof
  • The number of people living in the home
  • Protections in the home, such as: fire extinguisher, smoke alarm, burglar alarm, etc.
  • What renovations have been done, if any: wiring, plumbing, heating, roofing
  • Presence of a fire hydrant close to the home
  • Distance to the nearest fire station
  • Any (pleasant) hazards like: dogs, horses, trampolines and swimming pools

Purchasing a new policy and cancelling the old one

Purchasing your new policy
The quotes are in! Once you have your homeowner quotes, you should read through the list of coverages and pick the one that is right for you. Don’t just go by price—look carefully for differences in coverages between the quotes because you may find important differences that will impact your decision.

When you have selected your quote, inform INSURANCE-MOD of your selection and your desired policy effective date. The final step is to make payment to the new insurance company. You can expect a refund from the current (soon to be old) insurance company, which can be put toward the new policy.

Canceling your current policy
Your new policy is going to be effective in the next few days or weeks, and you need to have the current policy cancel on the same date. The current insurance company needs to be notified about the cancellation. There are several ways to contact the old insurance company. You can call them, email or write a letter.

The information the old insurance company needs to know to process your cancellation is:

  • Your first and last name
  • The policy number
  • The address of the home
  • The effective date of the cancellation (will be the same as the effective date of the new policy)

Mortgage companies and changing insurance

If you don’t use an escrow account
Even if you don’t use an escrow account to pay your homeowner insurance, you still need to inform your mortgage company of a change in your homeowner insurance. Almost every mortgage requires you to have homeowner insurance (which is different from Private Mortgage Insurance). If you don’t tell your mortgage company that you switched insurance, they could see that your old insurance canceled but not know you have new insurance. Since they require that you carry insurance, they might end up buying another homeowner insurance policy for you and then charging your escrow!

If you do use an escrow account
Mortgage companies usually offer (and sometimes require) an escrow account that automatically pays taxes and homeowner insurance premiums when they are due. Note that an escrow account is actually a way to have the convenience of monthly payments while benefitting from an annual
insurance rate.

If you have an escrow account already or are buying a home and will have one, then you need to give the mortgage company details about your new insurance policy. You will also need to make sure there is enough money in the escrow account for them to make the first payment of your new policy.

>>More about: Escrow and Switching Insurance

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