Can You Change Home Insurance Companies Before Closing on a House?

Yes, you can usually change home insurance companies before closing on a house. You are not locked into the first quote or insurance company you selected, but your replacement policy must meet your mortgage lender’s requirements.

Before switching, tell your mortgage lender, insurance agent, and closing company. Your lender will need updated proof of insurance and may need to adjust your escrow deposit or closing documents.

Do not cancel your original policy until the replacement policy is bound and accepted by your lender. A poorly timed change could affect your paperwork, cash needed at closing, or closing date.

When Can You Switch Home Insurance Before Closing?

You can generally switch home insurance companies at any point before closing. However, the amount of work involved depends on where you are in the buying process.

Before You Purchase a Policy

This is the easiest time to change companies. If you only received a quote and have not purchased a policy, you can compare other options and choose the coverage you prefer.

Send the final insurance information to your loan officer as soon as you make your decision.

After You Purchase a Policy but Before Closing

You can still switch after purchasing or binding a policy. However, your lender may already have the original company’s insurance binder, premium, and mortgage information.

Your new insurance agent will need to provide updated proof of insurance. The original policy may also need to be canceled, and you may need to arrange a refund or replace a payment.

During the Final Days Before Closing

A last-minute switch may still be possible, but it creates a greater risk of delay.

The lender and title company may need time to review the new policy, update the insurance premium, adjust the escrow deposit, and prepare corrected closing documents.

There is no single deadline that applies to every lender. Ask your loan officer how late you can make a change without putting your closing date at risk.

For more information about timing, read When Should You Get Homeowners Insurance Before Closing on a House in Oklahoma?.

Will Changing Home Insurance Delay Your Closing?

Changing home insurance companies does not automatically delay closing. If the new policy is approved quickly and all the information is correct, the closing may continue as planned.

A delay can happen when:

• The lender does not receive the new insurance binder on time.

• The policy’s effective date is incorrect.

• The mortgage company or loan number is listed incorrectly.

• The deductible is higher than the lender allows.

• The policy does not provide enough dwelling coverage.

• The new premium changes the amount due at closing.

• The insurance company requires an inspection before approving coverage.

Some buyers worry that changing insurance will automatically restart the three-business-day waiting period for the Closing Disclosure. An insurance change by itself does not normally trigger a new waiting period.

According to the Consumer Financial Protection Bureau, a new three-business-day waiting period is generally required only if the annual percentage rate becomes inaccurate, the loan product changes, or a prepayment penalty is added.

Your lender may still need to prepare corrected documents, so you should notify your loan officer before purchasing the replacement policy.

Will Changing Home Insurance Affect Escrow or Cash Needed at Closing?

Many mortgage lenders collect money for homeowners insurance through an escrow account. The lender then uses this account to pay future insurance premiums.

If your new policy has a different premium, your escrow calculation may change.

A lower premium could reduce the amount you need at closing. A higher premium could increase your cash-to-close amount. The change may also affect your monthly mortgage payment after the lender reviews your escrow account.

If the original insurance premium has already been paid, find out who made the payment. It may have been paid by you, your lender, or the title company.

Any refund will depend on the insurance company’s cancellation rules, the policy’s effective date, and who provided the original payment. Do not spend the refund until your lender and insurance agent confirm where the money belongs.

How to Change Home Insurance Companies Before Closing

Follow these steps to help prevent mistakes and closing delays.

1. Compare the Same Types of Coverage

Do not compare prices alone. Review the dwelling limit, personal property coverage, liability protection, deductibles, exclusions, roof settlement terms, and optional endorsements.

Oklahoma homeowners should pay close attention to wind and hail deductibles. Some policies also pay actual cash value for an older roof instead of the full replacement cost.

Learn more by reading Is Your Home Insurance Coverage Enough to Rebuild in Oklahoma?.

2. Ask About Your Lender’s Requirements

Before purchasing the new policy, ask your loan officer what coverage and deductibles the lender requires.

The lender may have rules for the dwelling limit, deductible, effective date, and mortgagee clause. Flood insurance may also be required if the home is in a high-risk flood area because standard homeowners insurance normally does not cover flooding.

3. Tell Your Loan Officer About the Change

Give your loan officer the new insurance company’s name, annual premium, agent contact information, and proposed effective date.

Early notice gives the lender time to review the policy and update your closing figures.

4. Bind the New Policy

The replacement policy should normally begin on the closing date.

Make sure the insurance documents include the correct property address, borrower names, mortgage company, loan number, and mortgagee clause.

5. Confirm That the Lender Accepted the Policy

Ask your loan officer or closing company to confirm that the new proof of insurance has been received and approved.

Do not rely only on confirmation from the insurance company.

6. Cancel the Original Policy Carefully

Wait until the replacement policy is bound and accepted by the lender before canceling the original policy.

Ask the original insurance company about its cancellation process, possible fees, and refund schedule. Keep copies of all cancellation notices and payment records.

7. Review Your Final Closing Disclosure

Compare the insurance premium, escrow deposit, and total cash needed at closing with your earlier estimate.

Contact your lender before closing if the original insurance company is still listed or the premium amount is incorrect.

Homeowners Insurance and Mortgage Insurance Are Different

Homeowners insurance helps protect the house and certain other property against covered losses. Mortgage lenders usually require this coverage before completing the loan.

Private mortgage insurance, often called PMI, protects the lender if the borrower stops making mortgage payments. PMI may be required when the down payment is below a certain amount.

Changing homeowners insurance companies does not cancel or replace PMI.

Key Takeaways

• You can usually change home insurance companies before closing.

• Tell your lender before switching so it can approve the new policy.

• Do not cancel your original policy until the replacement is bound and accepted.

• Changing companies may affect your escrow deposit and cash needed at closing.

• A last-minute switch could delay closing if documents are missing or incorrect.

Get Help With Home Insurance Before Closing

Buying a home is already a busy process. Jim Holmes Insurance can help you compare coverage, understand Oklahoma wind and hail deductibles, and provide the insurance documents your lender needs.

We serve homeowners in Moore, Oklahoma City, Edmond, Newcastle, Norman, Noble, and nearby Oklahoma communities.

Click here to request a home insurance quote!

Call Jim Holmes Insurance at 405-321-4664 for personal assistance.

Frequently Asked Questions

Can I change homeowners insurance companies before closing?

Yes, you can generally change companies if the new policy meets your lender’s requirements and updated proof of insurance is submitted on time.

Will switching home insurance restart the three-day closing period?

No, an insurance change alone does not normally restart the three-business-day waiting period, although corrected closing documents may be needed.

What happens if my first insurance premium has already been paid?

Refund handling depends on the policy’s effective date, the insurance company’s rules, and whether you, the lender, or the title company made the payment.

When should my new homeowners insurance policy begin?

The new policy should normally begin on the closing date unless your lender or insurance agent gives you different instructions.

Should I cancel my original policy before buying the replacement?

No, wait until the replacement policy is bound and your lender has accepted the updated insurance documents.