Switching Homeowner’s Insurance Can End Up Costing You Big
There is no shortage of home insurance commercials on television screaming the virtues of switching insurance policies to a new company for large savings on your insurance premiums. However, it may not be as easy as the commercial spokesman makes it out to be. There are a few hidden pitfalls that you need to be careful to avoid in order to make switching beneficial to you and your wallet.
The following are three ways switching homeowner’s insurance can end up costing you more than you save:
Missing The Fine Print
If you change homeowner’s insurance, be sure to read the fine print of your new policy. Does it require you to get a home inspection and new improvements made before your policy takes effect?
One North Carolina woman recently switched her homeowner’s policy to a new insurance carrier only to find out that she needed to make over $4,000 worth of repairs to her aging home to begin her new coverage. It would not have been a major issue except for the fact that she had already canceled her original homeowner’s insurance before finding out about the expensive upgrades she had to make to her home.
The upgrades now have all but negated the cost savings she would have enjoyed by switching insurance companies for years to come. You should never cancel your current insurance policy before you have the new one in place which includes any required home inspections the new insurer requires.
Losing Discounts By Jumping Around
One of the biggest discounts that policy holders enjoy is a discount for having multiple policies with the same insurance company. If you begin to chase better insurance rates around the internet and through other companies that have strong advertising campaigns, you could possibly run the risk of missing out on discounts that you used to enjoy from your previous insurance company.
It can really exacerbate the situation if you are moving automotive and homeowners to another insurer. You receive sizable discounts on your insurance policy for having them all in one place.
Different Requirements Between Insurers
Does your current insurer require you to have a permanent fence surrounding your swimming pool? Did your pit bull mix pass the dangerous dog screening from your previous insurance company?
The same might not be true of your new homeowner’s insurance company. You may find yourself on the wrong end of a cancellation letter in a few months if your insurer decides to audit your account and finds you outside of their guidelines.
You can never be too careful when you decide to switch insurance companies. The lure of a cheaper premium may not be as wonderful as you initially thought. Many insurance companies may not even want you back as a customer if you decide to abandon them in search of a cheaper deal elsewhere.
You have to double check the fine print and have your ducks in a row before you cancel your current policy. With a little prior planning and some research, you should be able to steer yourself away from a cheaper insurance policy that will cost you dearly in the end.
Hank Coleman is a personal finance writer and all around money and investing junkie who is currently studying for his CFP credentials. He received his B.S in Business Administration from the Presbyterian College in South Carolina in 2002 and went on to receive an M.S. in Transportation and Logistics from the North Dakota State University in 2007 and an M.S. in Finance from the University of Maryland in 2008. You can read more of Hanks writings on his website HankColeman.net and can also follow him on Twitter.