Should You Change Home Insurance Company | 2023

Should You Change Home Insurance Company | 2023?

Should You Change Home Insurance Company to Save Money? The answer is Explained Below. If you haven't made a claim on your homeowner's insurance in a long time, or never at all, and you notice that your insurance costs are going up, it might make sense to consider changing to a different insurance company. 

Even if you've had a claim recently, it's still a good idea to explore other options to see if you can find a better price.

However, before you start looking for new insurance quotes from agents or online, it's important to know that the current market for homeowners insurance has become more complicated compared to the past. Prices are increasing significantly and quite often.

Should You Change Home Insurance Company to Save Money? Guide 2023

Douglas Heller, who works for an organization called the Consumer Federation of America, warns that due to insurance companies raising their rates aggressively, the premium quote you receive today might end up being even higher when your policy needs to be renewed.

Don't let that warning discourage you from looking for new homeowners insurance or changing insurance companies. Consumer Reports has always believed that sticking with the same homeowners or auto insurance company just because you've been with them for a long time isn't always the best choice. 

It's smart to compare insurance coverage regularly. Right now, this advice is even more important as insurance rates are increasing for both homeowners and auto insurance. It's a good idea to shop around and consider switching every year.

However, it's important to do it the right way in the current market. Here are six helpful tactics to make changing insurance companies work in your favor, especially if you've made insurance claims in recent years.

Switching homeowners insurance now is different from before because prices have been rising much faster in recent years. On average, premiums could increase by 7.1 percent in 2023, following a significant jump of 12.6 percent in 2022. This is higher than the historical average of about 5 percent.

The reason for these premium hikes is that insurance companies are facing huge losses, mainly due to major natural disasters like hurricanes and the inflation in construction costs caused by the pandemic. Also, their investment gains, which usually contribute to their profits, haven't been as strong. 

As a result, insurance companies are raising rates all over the country, not just in areas affected by floods, storms, or wildfires. Regulators, who review these changes in most states, are also approving the rate increases.

Now, here's where it gets tricky. If you switch to a company with a great rate right now, they might significantly raise that premium when it's time for you to renew your policy next year.

According to Bill Martin, CEO of Plymouth Rock Home Assurance Group, this is not a bait-and-switch tactic; it's just how the insurance business is operating but with a higher chance of surprising price increases. 

Some companies may have already gone through the process of proposing and getting approval for their rate hikes from regulators, which can take a few months. However, others might not have done so yet. 

So the rate you get from a new company may not include a planned rate hike, which means you could face higher costs in the future.

Who Should Consider Switching Homeowners Insurance Now?

If you've noticed a big increase in your insurance rates recently, it's a good idea to look for other options. If your rates have gone up by more than 15 percent, you should talk to your insurance agent and see if there are better choices available, according to Brent Thurman, who owns Keystone Insurance Services in Utah.

Even if you just have a feeling that you could find a better deal somewhere else, it's worth exploring. Alaina Hixson, from Churchill Mortgage in Tennessee, suggests that if your rates have been rising and you've been with the same insurance company for a long time, it might be time to shop around.

A survey conducted by Consumer Reports found that many homeowners stick with the same insurance company for years, even decades. However, among those who switched companies in the five-year period covered by the survey, 40 percent said they did so to get a better price.

Should You Switch Homeowners Insurance If You've Made Claims Before?

While you can shop for insurance coverage at any time, if you've made several claims within a couple of years, you might not find much in the way of savings. Having just one claim, especially for water damage, can make it harder to find cheaper coverage. Typically, if you've had two or more claims, a new insurance company might charge you higher rates or even refuse to insure you.

However, that doesn't mean you shouldn't try to switch, especially now when insurance premium prices can vary significantly. Even if you have a history of higher-risk claims, there might be companies that can offer you a better price than your current one, according to Douglas Heller.

Keep in mind that not mentioning recent claims when applying for coverage won't hide them from a new insurance company. Claims history for homeowners and auto insurance, going back up to seven years, is stored in a database called Comprehensive 

Loss Underwriting Exchange (CLUE), owned by LexisNexis Risk Solutions. Insurers with access can check your claims history. You are entitled to a free copy of your CLUE report every year, so make use of it to dispute any errors or inaccuracies.

Strategies for Changing Homeowners Insurance Now

If you want to switch homeowners insurance companies and save money, here are some tips:

1. Start by talking to your current insurer: 

Before you make a decision, give your current insurance company a chance to offer you a better rate. Even if they can't improve the price for the coverage you want, at least you'll have a reference point for comparison with other insurers.

2. Look for discounts and potential savings: 

Ask your insurer about any new discounts you might be eligible for. Inquire about changes in your life or property that could lower your premium, such as installing safety and security systems or quitting smoking. You can also request a credit review if your credit score has significantly improved, as it can affect your insurance prices in most states.

3. Consider bundling policies: 

If you need both auto and homeowners insurance, consider getting them from the same company. Bundling policies often results in more significant discounts compared to loyalty discounts for long-term customers.

4. Explore various channels for new coverage: 

Shop around using different methods like contacting insurers directly, using third-party search engines, and seeking help from independent agents who represent multiple companies.

5. Switch when the savings are substantial: 

Unless you are dissatisfied with your current insurer's service, it's not worth switching for a small price difference. Wait for more substantial savings that can make a real difference.

6. Make fair comparisons: Ensure that you're comparing the same coverage limits and add-ons when evaluating different insurance carriers. Also, check that the deductibles are similar in the policies you're comparing.

7. Research the company's financial stability: 

Besides price, consider the insurer's financial ratings before switching. Check for A.M. Best and Weiss Ratings, which assess insurers' financials. Stick with companies that have at least an "A" rating from A.M. Best or a "B" rating from Weiss.

8. Avoid unfamiliar or surplus lines companies: 

Be cautious when considering insurance companies you've never heard of. Make sure they are licensed and regulated insurers and not surplus line companies, which may not be as reliable and secure.

9. Use Consumer Reports' survey-based ratings: 

If you are a Consumer Reports member, you can use their homeowner's insurance ratings, which consider thousands of members' experiences with different insurance groups. These ratings cover aspects like claims handling, premium price, customer service, and more to help you make an informed decision.

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