Canceling a home insurance policy is a relatively easy task. However, considering the value of your home, it’s important to do this simple task properly. Here’s how to cancel your homeowners insurance and avoid mistakes during the process.
In this article:
How do I cancel my homeowners insurance?
You can usually cancel your homeowners insurance anytime by phone, but it’s best to figure out your cancellation date and get the necessary documents in place before you make the call.
|Step 1: Decisions||Choose your cancellation date.||How can I minimize my cancellation fee? When does my new policy start?|
|Step 2: Documents||Have your existing policy’s declaration page handy, if available. If you have a mortgage, provide proof of new insurance to your lender.||Will my lender accept my new insurance documents electronically?|
|Step 3: Make the call||Call your insurance agent or authorized representative.||When will I receive confirmation?|
The call to cancel your homeowners insurance usually only takes about five to 10 minutes. Your company may ask you to complete a form, but it usually just needs to confirm your policy number, address and cancellation date.
If you’re canceling due to a move, you should also provide your new address for future correspondence.
Find out when the insurance company will send written confirmation of your cancellation. Call back if you don’t receive written confirmation within this timeframe to make sure your request was processed.
Determining your cancellation date and having the relevant documents in place ahead of time can help make the process go smoothly.
How do I choose a cancellation date for my home insurance?
The main factors to consider in deciding on a cancellation date for your home insurance are your insurance company’s cancellation fee and having your current policy’s end date coincide with the start date of your new one.
If you’re selling your home, you need to keep your insurance in place until the transaction officially closes.
Cancellation fees and refunds
Your insurance company cannot charge you for coverage beyond your cancellation date, but it can charge a fee for canceling before the current policy period ends. It’s best to find out about your insurance company’s fee ahead of time.
With some companies, the cancellation fee gets smaller as you get closer to the end of your policy period. You can avoid this fee altogether by scheduling your cancellation for the final day of your current policy period, which technically counts as non-renewing your policy.
The insurance company also has to refund any amounts you’ve prepaid for coverage beyond the cancellation date. Your cancellation fee is usually deducted from your refund.
Your new home insurance policy
It’s best to schedule your new home insurance policy to begin on the same date that your current one ends.
Your existing coverage ends at 12:01 a.m. on your cancellation date, and your new policy begins at the same time on the first day of your new policy period. Scheduling one policy to end on the same day a new one begins allows you to avoid a lapse or overlap in coverage.
If you cancel your insurance on a mortgaged home without a replacement policy in place, your lender can obtain insurance through a process known as force-placement to protect its financial interest in your home. Force-placed insurance is something you want to avoid, because it usually costs considerably more than insurance you can purchase on your own.
Which documents do I need to cancel my home insurance?
The key documents you need when you cancel your home insurance include your existing policy’s declaration page and, if you have a mortgage, proof of new insurance for your lender.
Current policy’s declaration page
Whether you have a mortgage or not, it’s good to have your current policy’s declarations page handy when you call to cancel your home insurance. Your insurance company will need to verify your policy number and address, and it’s easier to do so when you have the relevant details from the declaration page in front of you.
Proof of new insurance
You don’t need to provide proof of new home insurance to your current insurance company when you cancel, but if you have a mortgage, you need to provide it to your lender.
Your new insurance company can provide an evidence of insurance form for this purpose. If your new insurance agent provides the required documentation directly to your lender, you usually still need to contact your lender to authorize the insurance change.
When should I cancel my homeowners insurance?
Your contract with the insurance company allows you to cancel your homeowners insurance at any time, for any reason, but you should really only cancel when doing so is in your best financial interest.
You should never cancel an existing policy until your new insurance company issues your new policy, which will show your confirmed rate and start date. A quote is just a proposal that is not guaranteed.
In general, it’s good to shop for insurance every few years, or when you have a life change, not only find a better rate, but to also make sure you have enough coverage.
For example, you may need more liability coverage after you’ve lived in your home for five to 10 years than you did when you purchased it, if you had fewer assets back then. Or, if you have a newly licensed teen driver in your home, you may get a better combined rate on home and auto insurance by bundling these policies with a different company.
The only direct penalty for switching home insurance before a policy period ends is your insurance company’s early cancellation fee. However, canceling too frequently may make it harder to find favorable rates in the future.
Some insurance companies offer better rates to applicants who have been with their current company for at least three or four years than to those who switch every year. You can still request and compare quotes now. But if the rates seem high, check back in a year or two.
When can the insurance company cancel my policy?
While you can cancel your policy at any time or non-renew at the end of any policy period you choose, the insurance company does not have as much latitude.
Most states restrict an insurance company’s ability to cancel or non-renew your policy after it has been in effect for a certain period, usually 60 days. After that, the insurance company can usually only cancel your policy for a few extreme reasons, such as if you don’t pay or if you file a fraudulent claim.
The insurance company has more discretion to non-renew. This usually includes the ability to non-renew your policy if you file too many claims within a specified time period.
The specific restrictions vary by state, and you can usually find them, as well as your consumer rights, on your state insurance commissioner’s website.
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