Maybe you have resolved to save money in the new year. One way you could do that is by shopping for new home insurance. But, Amy Davis signed up with a new insurance company, then realized that the low rate you are offered can change with no notice.
Question: Can an insurance company offer you a rate, and then change the price after you’ve paid?
Amy shopped around and found what she thought was a good deal, she paid for a full year. Weeks later, Amy got a notification that there was a big increase in the rates. She asked Jessica Fuentes with Brazos Insurance Agency why an insurance company might wait until after the policy take effect to make changes.
Answer: Yes, an insurance company can increase rates after you’ve agreed on a price.
“Most carriers have about a 60-day underwriting period in which they can review all the stuff that the agent put on the application to get the rate that you were offered. So, we are looking at a system and we’re putting in all the data for your home and it spits back a number. This is how much it’s going to cost to insure you. As long as all the data is factual, then technically there should be no changes. But sometimes, you know, the system will pull automatically. Hey, your home is made mostly of brick, you know, and this is how many square feet it has. And even though the system has pulled that information, if you don’t verify it when the inspector goes out, there may be some differences,” explains Fuentes.
Fuentes says sometimes depending on how picky the inspectors are, they’ll come out and double-check specifics. This is what could impact your overall bill.
Specific things an insurance agent might double-check
- The type of the roof. Inspectors may get specifics on the shape or type of shingle.
“If we didn’t pay attention to the shape or the type of shingle on the roof and we selected the incorrect information on the application, when the inspector goes out, he’s going to correct it, and then he’s going to report that to the insurance carrier. They’re going to go, ‘Oh yeah, it’s not this kind, it’s this kind,’” explains Fuentes. “Depending on if it’s a more expensive shingle or a cheaper shingle, it’ll change your replacement cost.”
- Flooring inside the home.
The option of wood floors may have been automatically chosen, but really, you have laminate floors.
“A lot of times these inspectors and the underwriters, they’re not very good at like talking to each other. So they’ll turn in their reports and then it’ll take the underwriter, you know, sometimes weeks to review that information and give the agent notice and say, ‘Hey, this is what we found in the inspection. This is what you have to talk to your client about.’ So, sometimes that can take a long, longer time, you know, which is why it’s important as the agent to pay attention to that underwriting period. You have 60 days to tell me if something needs to be changed, after those 60 days, they’re stuck on that risk. And depending on the carrier, obviously, they have different underwriting periods, but most of them are 60 days.”
When looking for new rates, consider what has changed in your life since you last shopped around. Examples include:
- If your credit score has improved, you may get better rates.
- If you have made repairs/upgrades to your home.
- If you installed cameras inside or outside of your home.
Other things to consider: Fuentes says while you may think your roof is not old, many insurance companies don’t want to insure you if there are five years left on the life of your roof. So, if the roof is 15 years old, for example.
Watch the full Ask Amy episode about homeowner’s insurance here. Amy and Fuentes talk more about shopping for the best rates and how you can look for better deals.
Question: When an insurance broker asks to see current insurance paperwork, should I give it to them?
Email Amy at AskAmy@kprc.com if you have a question or topic idea.
