When should you shop around for home insurance?

You should start shopping for home insurance as soon as your purchase offer is accepted and you sign a home purchase contract.

When Buying a New Home

• Immediately after signing the contract: Begin getting quotes right away. This gives you time to compare rates and handle any unexpected issues, like a required roof inspection.
• 2 to 3 weeks before closing: Have your chosen insurance agent finalize and bind the policy.
• At least 3 days before closing: Give proof of your policy and the paid first-year premium to your mortgage lender. Lenders will not release loan funds without this. You can compare companies and quotes using an online marketplace like The Zebra.

When You Already Own a Home

• Once a year: Review and shop your policy annually to check for better rates or discounts.
• After major home upgrades: Shop or update your policy after a major renovation, a new roof, or adding features like a pool or trampoline.
• When life changes occur: Look for new coverage after getting a new pet, a change in household members, or if your current insurance company raises your rates. You can switch policies at any time and get a refund for your unused prepaid premium.

Yes, it is very smart to shop around for homeowners insurance because rates for the exact same coverage can vary significantly between different companies.

Why You Should Shop Around

• Save money: Insurance companies use different formulas to calculate risk, meaning one provider might charge hundreds of dollars less per year than another for identical coverage.
• Rates increase over time: Staying with the same company out of habit often leads to creeping price hikes.
• Find better discounts: Policies change, and you might qualify for new discounts for home security systems, a new roof, or bundling options. As noted on Liberty Mutual, comparing options ensures you aren't overpaying.

Tips for Shopping Around

• Compare equal coverage: Make sure you are comparing the same dwelling limits, deductibles, and endorsement levels.
• Check bundling: Ask if combining your home and auto insurance provides a better overall price.
• Use an independent agent: A local broker can pull quotes from multiple regional and national carriers at once to save you time.
• Review your current policy: According to advice from Veterans United, write down your current coverage details first so you have a clear baseline for comparison.

You should shop around for homeowners insurance at least once a year, ideally 30 to 45 days before your current policy renews.

When to Shop Around More Often

• Noticeable rate increases: If your premium jumps significantly at renewal time.
• Major home improvements: When you build an addition, remodel, finish a basement, or install a high-risk feature like a swimming pool.
• Coverage or policy changes: If your insurer drops coverage types, adds new exclusions, or decides not to renew your policy.
• Significant life events: Such as getting married or making high-value personal purchases.

Best Practices for Comparing Rates

• Check timing: Start looking about a month before your renewal date so you can compare NerdWallet quotes without any gap in coverage.
• Watch escrow accounts: Switching mid-year can complicate mortgage escrow refunds and new payments.
• Get multiple quotes: Aim for three to five quotes from different large and small carriers or independent brokers to see if your current rate is competitive.

The 80% rule in home insurance means you must insure your home for at least 80% of its total replacement cost to receive full payouts on claims without a penalty.

How It Works

• Replacement Cost: This is the price to rebuild your home using today's material and labor costs. It is different from market value or the price you paid for the land.
• The Threshold: If your home's rebuild cost is $500,000, your dwelling coverage limit must be at least $400,000 (80%).
• Coinsurance Penalty: If you insure your home below that 80% mark, your insurance company reduces your payout proportionally for any partial claim, not just total losses. You have to pay the rest out of pocket.

Example of a Penalty

• Replacement Cost: $500,000 (requires $400,000 coverage)
• Your Coverage: $395,000
• Cost of Damage: $250,000 (e.g., a kitchen fire or storm)
• Payout Calculation: The insurer divides your coverage by the required amount ($395,000 / $400,000 = 98.75%).
• Final Payout: You receive 98.75% of your $250,000 claim, which is $246,875, leaving you to pay $3,125 out of pocket plus your deductible.

Why Coverage Dips

• Inflation: Rising construction costs increase rebuilding prices over time.
• Renovations: Upgrades like a remodeled kitchen or a new room addition raise your home's replacement value. You can check Liberty Mutual or Kin to review how policies respond to these shifts.

Avoid guessing, speculating, or admitting any fault when speaking to your homeowners insurance company or adjuster.

When filing a claim or talking with an adjuster, your words can be used to minimize or deny your payout. Protect your claim by avoiding these common statements and habits:

Phrases and Statements to Avoid

• "I think" or "It might have been...": Never guess or speculate about the cause, timeline, or extent of the damage. Stick strictly to proven, observable facts. Guessing introduces doubt that the insurer can use against you.
• "It’s not that bad" or "It's minor": Downplaying the damage can lead the adjuster to write a low initial estimate that does not cover full repairs.
• "I'm sorry" or admitting fault: Never apologize or accept responsibility for an incident. Even a casual apology can be misconstrued as an admission of negligence, which can void coverage.
• "I don't have receipts or an inventory": Admitting right away that you lack records or proof makes it harder to claim high-value items. Take time to gather your documents first.
• Guessing about pre-existing wear: If an adjuster points out older wear and tear, do not immediately agree that it was old damage. State clearly that you rely on a professional inspection to determine the exact cause and scope.

Important Rules for Communication

• Keep it factual: Stick only to what you can visually prove with photos, videos, and professional assessments.
• Don't rush recorded statements: If the insurance company pressures you for a recorded statement immediately after a loss, ask for time to review your policy or consider consulting a professional.
• Get everything in writing: Never rely on verbal promises from an adjuster. Ask for all agreements, settlements, and explanations in writing.