Am I able to cancel my home insurance coverage any time I feel like?
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Asked June 17, 2015
As a homeowner, you have the right to change insurance companies at any time you choose to do so, but you may not have the option of canceling your policy. If your home is still under a mortgage, the mortgage agreement may contain a clause which obligates you to have home insurance throughout the entire length of the mortgage.
If you own your home outright, home insurance is a personal decision and you can cancel the policy whenever you wish. What you need to be aware of is that dropping your home insurance could leave your family without a home or much of anything else in a single twist of fate. A single home insurance claim could easily surpass the total amount of premiums you have paid in over the years, even long after the home has been paid off.
Some mortgage companies do not require you to carry homeowners insurance, but they may require you to carry mortgage insurance. Mortgage insurance is specifically designed to protect the lender's investment in your home, and a claim against this type of policy usually pays directly to the mortgage company. If you only have mortgage insurance, a claim for a total loss would pay off the loan on the home but it would not provide you with proceeds that would help you in rebuilding the home. In other words, the lender would get paid off, but you would have nothing unless you had a homeowner’s policy to protect your own interests.
If you are simply changing insurance companies, you can purchase the replacement policy before you cancel the current one so that there is not a lapse in coverage. Start by shopping online with a website like this one which offers free online homeowners insurance quotes. Since this website is an independent insurance company, you will receive a primary quote along with several comparison quotes so that you will know you are buying the best policy to fit your needs. To avoid coverage lapses, set up the new policy to go into effect and then inform your current insurer that you would like to cancel your policy on the day that the other one begins.
Answered June 25, 2015 by Anonymous