The Art of Switching Your Home Insurance
For many homeowners, switching your home insurance company or agent can seem as daunting as refinancing your home. After all, how does the mortgage company handle it? Will your escrow payment be thrown off? Is all of this worth the savings? These questions, and more, will be answered in this blog. We work with many mortgage professionals and homeowners throughout Indianapolis and Central Indiana on these dilemma’s every week. There is no reason to forego saving money on your home insurance due to the fact that switching sounds like a pain. We’re here to educate and assist our clients throughout the process.
When switching your home insurance, especially mid-term (during the current insurance policy period), you’ll want to follow a few important steps. Firstly, it is helpful to notify your mortgage company. You will want to notify your mortgage company that you’re switching and to not pay any outstanding insurance bill from the current company if they haven’t already. This will give your mortgage company authorization to pay the new bill and will stop any payments to the current insurance carrier. You will also want to make sure the new insurance agent, in our case Steffey Insurance, has the correct mortgagee clause for your mortgage company. The mortgagee clause is usually the name and address of the mortgage companies billing center. We will also need your loan number for reference. One quick phone call to your mortgage companies’ customer service number can help accomplish all of this. In the case of the mortgagee clause, many times it will be listed on your current insurance declarations page or we can search through our current database of mortgagee clauses and usually find the correct one.
Once this is taken care of we will issue the new policy effective the date of your choice and have your current insurance cancelled effective the same date. At this point, you’ve nearly accomplished your goal of switching. The insurance company we use for your policy (we currently have 8 different home insurance carriers) will send the invoice directly to your mortgage company for them to pay, but the next step is the most important part…
You will received a refund from you former insurance company for any unused premium. For instance, if your previous home insurance was $1000 per year and you cancel 6 months into the policy, you will receive a $500 refund. The refund is sent directly to the customer instead of the mortgage company. We ALWAYS recommend our clients put that refund back into their escrow accounts to avoid a fluctuation of their escrow payments. If you decide to pocket the refund, be prepared for an increase in your escrow payments because you will essentially be paying for two insurance policies.
After these steps are finished, you are good to go. You have switched insurance companies and saved yourself money. We pride ourselves on seeing this process through with our customers. We help our clients every step of the way and make sure we outline these steps clearly. In brief, the steps are as follows…
- Notify your mortgage company of the switch and give your new insurance agent the mortgagee clause and loan number if you have it.
- Issue the new policies and cancel your old ones effective the same date.
- You will not have to pay the bill if you are paying through escrow with your mortgage company. The bill will go directly to the mortgage company.
- You will receive a refund for the old policy. This refund should be paid back into your escrow in order to even everything out. If you do not have a mortgage or don’t pay through escrow, you will simply pocket the refund and pay the new bill.
Following these simple steps will help you switch your homeowners insurance quickly, and efficiently. We work daily with many mortgage professionals throughout the greater Indianapolis area. If you give us a call, we are happy to recommend mortgage professionals in your vicinity. For instance, we have worked with Randy Nail at Wells Fargo for many years. He is the type of mortgage professional that will educate you and help you secure the right loan for your home purchase. You can visit his website here which has contact information and calculators at your disposal. We hope this helps make your next home insurance switch an easier process and of course we hope it is with us!