Every year, millions of homeowners across the country renew their home insurance policies. Yet, many don’t ever do anything about it.
Because most home insurance policies will renew automatically, homeowners may just choose to allow the policy to keep going without even double checking whether any of their coverages, guidelines or premium changed. This is even more likely for homeowners who pay their home insurance premiums through their mortgage escrow.
The old saying that applies here is “out of sight, out of mind.” In other words, since home insurance policies will just continue to renew automatically unless you do something about it — in most cases — homeowners don’t even pay attention to the renewal period. In fact, it’s possible that many homeowners don’t even know the date when their insurance policies renew each year.
Yet, when the renewal period for home insurance policies is a great opportunity to review your policy and make any changes or updates as necessary. Below is a full home insurance renewal guide that will walk you through the important steps.
How Home Insurance Renewal Works
Most home insurance policies last for a full year, or 12 months. During that period, nothing in your insurance policy will change, including your monthly premiums.
About 30 days before your policy’s annul end date, you will receive a renewal statement from your home insurance company. This may come in the regular mail, or it may be emailed to you — depending on how you’ve set up communication preferences.
This letter will inform you that the home insurance policy you have will expire by a certain date. Most letters will also tell you that your policy will automatically renew on a certain date if you don’t take any action.
As part of the letter, your insurance company will provide you with details about any changes to the coverage amounts, coverage types and/or premiums. This will help you prepare your budget for the year ahead, whether you pay your home insurance premiums directly or through your mortgage.
The Options at Renewal
As the homeowner, you basically have three options at home insurance renewal time.
The simplest option is just letting the policy renew automatically. If you take this route, you will be accepting the terms the insurance company is offering for your policy, including the coverage limits and premiums.
Your second option is to cancel your policy altogether. If you are still paying a mortgage on your home, it’s important to know that your lender may require you to prove that you’ve secured a replacement home insurance policy before they allow you to cancel your current home insurance policy. Since the home is technically not fully yours until you pay the mortgage off, your lender can require you to carry home insurance to protect what is essentially their asset.
Your final option is to make changes and updates to your current policy, based on any new situations you might find yourself in — or updates that you’ve made to your home.
At the same time, your insurance company basically has three options during renewal as well.
First, they can renew the policy at the current terms and the current rate. They can also decide to renew your policy but make changes to the terms and/or the rate.
Or, your insurance company also has the right to decide not to renew the policy. Generally speaking, this will only happen if the insurance company determines that your house provides too risky a situation to insure. This might happen if you live near an area prone to certain natural disasters or if you’ve filed too many insurance claims in a certain period of time.
If your insurer doesn’t want to renew your plan, they’ll typically send out a notice between 45 and 60 days prior to the end of the policy.
What to Check For?
It’s always a good review your plan changes when you receive the notification letter from your insurer. There are three main areas you should pay attention to, which we’ll outline below.
Your premium rate is often the most important aspect of the home insurance policy to most people. In many cases, home insurance rates will go up from year to year, based on a number of factors.
Check to see the description of why your rates are going up, if they are. It could be as simple as typical cost-of-living increases, or it could be due to changes in your coverage amounts. Your rates could also go up if you filed a claim in the last year.
Did something about you or your home change in the last year — or is going to change in the year ahead — that would necessitate you making updates to your policy? This is a question that you should ask around the renewal period.
Things that would fit into this category include major upgrades that you made to your home, if you decide to start a business based out of your home, or whether you purchased a significant piece of personal property.
It’s possible that you might need to update your insurance company of these changes, depending on what they are.
Finally, make sure to check whether the coverage levels of your policy are changing for the year ahead. If they are, you should find out why — and whether the new levels are adequate.
Even if your coverage levels aren’t changing, now is the time to review whether you have enough insurance coverage, or whether you need to increase some depending on your situation.
Work with a Trusted Insurance Company Like Signature Insurance
It’s always important to work with a trusted home insurance company, and Signature Insurance is just that company in Michigan. We have been providing homeowners in the state with outstanding home insurance policies for year now.
We help walk all of our clients through all the details of their policy, including answering any questions come renewal time. To find out more, and to get a free quote, contact us today.
Get insurance today!
At Signature Insurance we want to help you understand your insurance coverage options so you make the best decision.
Contact us at (586) 274-9600 and we’ll be happy to get quote for you from many of the top auto insurance companies or home insurance companies in Metro Detroit.