There are several reasons why a homeowner may want to switch home insurance companies or policies before their home insurance renewal date. But is this possible? Are there any penalties for changing your house insurance before it's time? Stick around to find out!
Is it possible to modify my home insurance policy before the renewal date?
The short answer is yes. You can switch homeowners insurance companies and change your coverage options before your policy renewal date. However, there are some potential consequences you could face by doing so. For example, going to a new insurance company and cancelling your old policy before the cancellation date could result in a cancellation penalty, which you will need to pay when breaking your insurance contract. Cancellation penalties can vary between providers and are based on two methods:
- Short-rate cancellation fees: This method charges customers a higher penalty for cancelling insurance early. The fee is designed to cover costs incurred by the insurance company, and a portion of the premium will be kept by the provider. For example, if you cancel your insurance halfway through, your provider may keep 60% rather than refunding you the full amount.
- Pro-rate cancellation fees: With a pro-rate method, your insurance company will refund the unused portion of your premium. For example, if you are 9 months into your plan, you'll be refunded the remaining 3 months.
It should be noted that homeowners may be able to negotiate a waiver of their cancellation fees if their account is in good standing and they have a good relationship with their insurer. You may also be able to reduce cancellation fees by bundling your policies together. So, make sure to ask whether this is possible before opting to cancel as is.
Another potential consequence is a lapse in coverage. When this occurs, you'd be responsible for paying any repairs or losses out of pocket. You would also be at risk of paying more for your insurance policies than you originally intended to.
Again, before cancelling your home insurance with your current insurer, make sure you have a new insurance policy in place to prevent a lapse from occurring.
Reasons you may switch home insurance companies
There are many reasons why changing home insurance may be a priority for homeowners, including the following:
A lower insurance premium
Homeowners insurance comes at a price. If you're paying high premiums for your current policy, you may want to change home insurance companies to get a better price. Because there is more than one home insurance company in Canada, competition exists, meaning you'll likely be able to find a lower premium than what your current insurance company offers by doing a little research.
Better coverage options
Another reason why you may want to switch to a different insurance provider is due to the coverage options offered. Coverage varies between homeowners insurance companies. Therefore, if you're looking for specialty coverage or more protection that your previous insurer doesn't offer, then looking for a new insurer that offers coverage for your needs makes sense.
Better customer service
Lastly, you may be unhappy with the customer care and service offered by your current provider. If you have trouble getting in touch with an insurance agent, have difficulty filing claims, and experience poor customer service in general from your insurance company, switching to a provider you feel has your best interests in mind can make a world of difference.
Switching home insurance when moving to a new home
If you're selling your home, you may be wondering whether a home insurance transfer to your new address is possible. Most of the time, transfers are not possible, given that your new home will need to be reassessed for potential risks and matched with homeowners insurance that considers these risks, which will likely change how much you will end up paying monthly to month moving forward.
Changing your address for insurance is key to ensuring you're sufficiently protected in the event you need to file a claim in the future. So, before your moving date, make sure you contact your home insurance company to inform them that changes to your existing policy will need to be made, given that you will be at a new address.
Further, keeping both homeowners insurance policies active until you are fully moved into your new home and out of your old one is often the best option, as it can help you avoid a lapse in coverage during this time. Moving is incredibly labour and emotionally intensive. So, having both homeowners insurance policies in place can act as a safety net in case something unexpected happens.
What to watch out for when you switch home insurance companies
Most of the time, you will be able to save money and get the best rate by doing some research beforehand. Providers use different methods to calculate insurance costs. Therefore, by comparing quotes beforehand, you'll be able to find the best rate available to you based on your unique home and circumstances. There are also some other pitfalls you need to be aware of when changing from your current insurance provider to another:
- Low initial rates: Some insurance providers offer lower rates to attract new customers, which often increase after one or two years when the offer expires. Before switching, ask how rates may change and whether there are any hidden charges you need to be aware of.
- Coverage limitations: Some cheaper policies come with lower coverage limits, peril exclusions, and other risks. So, keep in mind that the cheapest option out there isn't always the best option. The key is to find a balance between how much protection you get and affordability.
- Claim denials and restrictions: Some insurers have strict rules about filing claims. Make sure you fully understand how their claim process works before switching.
- Credit scores and insurance history: An insurance company may use your credit score and past claims to calculate your premiums. So, get a quote beforehand as a low score and numerous claims can lead to higher premiums.
How to change your home insurance policy without switching providers
Before you change home insurance companies, you may want to consider negotiating your coverage and premiums with your current insurance provider. They may offer you discounts or allow you to change your deductibles and coverage limits.
Beyond this, you can purchase policy endorsements that will allow you to further customize your coverage. For example, high-value home insurance for your jewellery and other valuables or sewer backup coverage to protect your home from water and sewage damage. Alternatively, you can change policies within your current company for a better price.
What steps do I need to take to switch to a different insurance company?
Are you thinking of switching from one insurer to another before your coverage ends? Here are the steps involved to do so:
1. Review your current coverage
Before opting to switch, take a look at your current policy. Make sure you understand what is included and excluded from your insurance that you wish to change. Before looking for new insurance somewhere else, speak with your insurance company directly and ask whether there are any endorsements that you can add to your coverage that can fill the gap you're looking for.
2. Compare quotes and coverage options
If your insurance company does not have the coverage you're looking for, it's time to do your research. One of the best things you can do at this time is look at different insurers and obtain quotes from at least two or three. Insurers use different pricing scales when calculating customer insurance costs. As such, it's possible that you could find a better deal with other insurers for the same level of coverage.
3. Purchase your new home insurance policy
Once you've found the best price and coverage available, purchase your new house insurance. Make sure you have the correct information and documents needed to buy a new policy. We also recommend buying a new policy before cancelling your old one to prevent a lapse in coverage.
4. Cancel your insurance with your current insurance provider
Now that your new house insurance has been purchased, you can now go ahead and contact your previous insurer. Inform them that you would like to cancel your policy and that a new policy is in place. An insurance agent may ask why you are cancelling and will ask you to fill out various forms during this time.
5. Pay your cancellation fee
Depending on your insurance company, you may be asked to pay a fee for the early cancellation. The price of this cancellation fee will vary.
How much does the average home insurance policy cost in Canada?
The average home insurance cost in Canada is $1000 per year. That being said, insurance rates will differ for each homeowner, given that each home is unique. Additionally, when calculating costs for insurance policies, companies often look at various factors, including the location of your home, its current condition, your claims history, and more.
Can you invalidate your home insurance?
Yes, you can invalidate home insurance. Common reasons why your insurance policies may be invalidated by home insurance adjusters include overvaluing your home inventory that outlines your personal belongings, lying about the circumstances surrounding your claim, conducting criminal activities which led to the damages or losses, and more. It's important to remember that providing false information to your insurance company at the time of a claim could result in serious consequences, one of which is being charged with insurance fraud under the Criminal Code of Canada.
What is not covered by home insurance coverage?
While homeowners insurance protects policyholders against numerous unexpected risks, some events are not included. Common policy exclusions include water damage, mould growth, damage to your appliances, and more. As such, before signing your insurance contract, make sure you read your policy carefully. That way, you'll have a better idea about whether or not purchasing additional insurance coverage is needed.
Contact BrokerLink for affordable home insurance
At BrokerLink, we help Canadian homeowners find affordable home insurance based on their unique needs, budget, and property. Our experienced brokers have access to some of Canada's top insurance companies and policies, allowing us to customize your coverage so you feel confident knowing you're protected against unforeseen risks. Some of the homeowners insurance coverage we can help you obtain include:
If you're ready to work with a broker from BrokerLink, feel free to visit us at one of our many locations across the country. If we aren't in your neighbourhood, or you're not close by, give us a call over the phone to speak with a broker today.
Alternatively, if you're browsing for options and premiums, take advantage of our free online quote tool for a competitive insurance quote that is ready within minutes!
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