How to Deal with Home Insurance When You Sell the House

When Should I Tell My Insurance Agent I Sold My Home?

June 23, 2023 by Brad Davis, CIC (edited 1/8/2025)

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Selling your home is a big deal, and there are lots of things to keep track of. It can be easy to forget about cancelling your home insurance when there are so many things you are already doing to sell it. But it is important to let your insurance agent know when you sell your home, so they can make sure your coverage is terminated properly.

 

When should you tell your insurance agent you sold a home?

There is no one-size-fits-all answer to this question, as the timing will vary depending on your individual circumstances. However, it’s generally a good idea to let your agent know as soon as you have a signed purchase agreement. This will give them time to process the cancellation of your policy and issue you a refund for any premiums that have already been paid.

If you’re moving out of your home before the sale closes, you’ll also need to let your agent know. This is because vacant homes are at a higher risk of damage, so your insurance company may require you to increase your coverage or take other steps to mitigate the risk.

*SIDE NOTE:  You should contact your agent when anytime a house changes hands or occupancy.

 

What happens if you don’t tell your insurance agent you sold your home?

If you don’t tell your insurance agent that you sold your home, they may continue to bill you for premiums. This could lead to a lapse in coverage, which could leave you financially responsible for any damage that occurs to your home after the sale.

*Some insurance carriers can back-date the cancellation (with supporting documentation), however some will only back-date up to a certain amount of days, or not at all.

 

How do I tell my insurance agent I sold my home?

The best way to tell your insurance agent you sold your home is to call them directly. You can also send them a letter or email, but be sure to keep a copy of the communication for your records.

When you contact your agent, be sure to provide them with the following information:

• Your name
• Your policy number
• The date you sold your home
• Contact info so your agent can contact you with any questions

 

Will you get a refund for cancelling your home insurance policy mid-term?

Most of the time you will get a pro-rated refund from the insurance company or agency for the unearned premium (time you did not have coverage). There are a few caveats to be aware of.

• Some premium refunds are short rated, basically meaning there is a penalty fee charged by an insurance company when a policyholder cancels their policy before its expiration (getting a smaller refund than they would with a standard pro-rata). The short rate is not typically a big penalty and most often you can find the details in the policy.
• Some policy premiums are partially earned at inception or even full earned at inception. This is most common on short policies such as a 3 month or 6 month Builder’s Risk policy. When policies are short term, insurance companies may say the premium is 25%, 50%, or even 100% earned – meaning even if the policy is cancelled early a portion of the premium (or all of it) will not be refunded. You can also find this on a 1 year term policy.
• The time it takes to get a refund depends on a few things. This is a question we get regularly – how long will the refund take? One common thing I see is a client starts counting days from when they sold the property, not from when they notified us (don’t count on the attorney or anyone else to notify your insurance agent).

  – If your policy is written directly (still through an agency), then you will usually see a refund within 30 days (from the day you properly notified your agent or the company). Refunds are usually issed directly back to the insured (via check) from the insuring company.

– If it was written via a broker, it may take longer. A real quick example for this: Once you notify the agent, they will typically do their best to notify the broker within 1 – 2 days. That broker (who may be backed up like crazy) will do their best to notify the company within 1 – 2 days. Then the communication goes backwards from the company, to the broker, to the agent.  During this time, the broker and insurance company’s accounting department are getting dozens of these every day and often wait to issue refunds once or twice per month. This may take 45 days (in todays world) for the agent to get the refund, and then a day or so to process the refund to the insured. We are seeing this take 45 – 60 days on average right now (Jan. 2025).

  * Many insurance brokers and companies have been running a week or two behind to process just about anything for over a year.

  ** This is not an explanation of how all home insurance premium refunds work. READ YOUR POLICY or talk to your agent for the details about your policie(s).

 

Conclusion

Letting your insurance agent know when you sell your home is an important step in the process. By doing so, you can ensure that your coverage is terminated properly and that you’re not left financially responsible for any damage that occurs to your home after the sale.

Here are some additional tips for telling your insurance agent you sold your home:

• Be proactive. Don’t wait until the last minute to contact your agent. Too much communication with your agent is way better than not enough.
• Be clear and concise. Provide your agent with all of the information they need to process the cancellation of your policy.
• Keep a copy of your communication. This will help you if there are any questions down the road.
• You may be required to provide proof you sold the home – usually done by providing closing documents provided by the closing agent or attorney.

By following these tips, you can ensure that the process of telling your insurance agent you sold your home goes smoothly.