Cancelling A Homeowner’s Insurance Policy: What You Need To Know

Most homeowners spend years sticking with the same homeowner's insurance company. They either do not want to go with a different company, or think that they cannot try a different insurance company. If you are part of the latter group, you should know that you can cancel your policy with your current insurance company at any time. However, there are a few other things you should know about cancelling your policy.

You Will Need to Have Another Company and Policy Already Lined Up

If you have a mortgage (which most homeowners do), you are not allowed to be without coverage. Mortgage lenders expect that you insure your home for the entire duration of your mortgage loan. It protects you from having to pay on a home that was lost in a fire, and it protects the mortgage company's investment in lending the money to you to buy the home. If you cancel your current policy, you must automatically sign up and pay for a new policy on the selfsame day so that there are no lapses in coverage on your home.

If You Are Waiting on a Claim to Be Settled, Do Not Cancel

If you want to cancel your current policy because you are angry with the way they are handling an insurance claim (or not handling it, as the case may be), do not cancel just yet. You need a final say on your claim. If you cancel before the insurance company decides to cut you a check, you will never get that check. An insurance company is no longer obligated to send you a claim check if you have cancelled your policy with them before your claim is settled. At least wait to hear if they have denied your claim or cut you a check before you cancel your policy.

If There Are Loyalty Rewards Attached, You Lose Them

If an insurance company offers loyalty rewards and you cancel your policy to try another insurance company and then decide to return to the company who held your previous policy, you forfeit those rewards. So, say that you get a twenty-percent discount on your policy now as a loyalty reward. You cancel your policy for another company that is making a tempting offer. It turns out that the policy with that company and that offer are not so great.

You try to get your old policy and company back. You start from scratch, paying the new customer rates, which were and are much higher than you were paying before. You will have to seriously contemplate this before you cancel.