Navigating the World of Home Insurance: Lessons from My Journey
Let’s dive into a topic every homeowner deals with: home insurance. Over the past year, I’ve had my fair share of challenges with it, and while I could go on with the details, let’s focus on the big lessons I learned along the way.
The Reality of Rising Insurance Costs
First, let’s address the obvious—homeowners insurance premiums have been climbing steadily. There’s really no avoiding it. For context, my own policy increased by $600 in my first year of homeownership, and then it went up by another $600 the second year.
While this sounds like a lot, remember: breaking these increases into monthly payments can make them more manageable. So, don’t panic—there’s a way to budget for it.
The Risks of Switching Insurance Companies Mid-Term
Here’s where things got complicated for us. Our homeowners insurance is rolled into our monthly mortgage payment, which means the mortgage company pays the premium on our behalf when it’s due.
We decided to switch insurance companies right after our premium had been paid, hoping to save some money. Sounds simple, right? Well, not quite.
We received a refund check for the old policy—which should have been deposited into our escrow account. (If you ever find yourself in this situation, remember: this refund isn’t for you to spend; it’s for your escrow account.)
Unfortunately, our mortgage company didn’t pay the new policy on time, resulting in a lapse in coverage.
This is a big deal. Having no homeowners insurance for even a short period can lead to serious consequences:
The mortgage company could demand full repayment of the loan, as maintaining insurance is part of the agreement.
Alternatively, the lender may place their own insurance policy on your property, which is typically far more expensive than what you’d pay with a standard insurance company.
The Cost of an Insurance Lapse
After discovering the lapse, we had to scramble to find a new policy—but since we were now considered a risk, this proved challenging.
Our initial policy cost $2,400 per year.
After the lapse, we were quoted $6,000 per year.
We ultimately found a $4,000 policy, which was still significantly higher but offered better coverage.
This taught us a hard lesson: switching insurance companies without proper timing or planning can backfire.
When Inspections Lead to Unexpected Surprises
The challenges didn’t end there. After securing the new policy, the insurance company inspected our property. During the inspection, they determined our roof was no longer insurable due to damage—despite being less than five years old.
We couldn’t afford to replace the roof out of pocket, but with the help of a knowledgeable roofer, we found a solution.
The roofer, who had experience as an insurance adjuster, recommended filing a claim with our previous insurance company.
The claim was approved, and thanks to the roofer’s expertise, we received coverage for far more than we initially expected.
Key Takeaways for Homeowners
Verify Payments: Ensure your mortgage company is paying your insurance and property taxes on time. This simple step can prevent major headaches.
Research Before Switching: If you’re considering switching insurance companies, plan carefully to avoid lapses in coverage.
Hire Knowledgeable Contractors: When it comes to repairs, work with professionals who understand insurance claims. Their expertise can make a huge difference.
Stay Informed: While every situation is unique, taking the time to research your options can help you save money and avoid unnecessary stress.
Home insurance is a necessary part of homeownership, but as I’ve learned, there are ways to navigate the challenges and come out ahead. With a little preparation and the right resources, you can turn even the most frustrating experiences into valuable lessons.