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Does refinancing affect home insurance?
I refinanced my home to pay off my credit cards. Imagine my surprise when I saw my homeowners insurance go up! It wasn’t a lot, but I can’t figure it out. Why would refinancing affect my home insurance rates?
Bellina Gaskey · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
That’s a complicated question—or rather, the answer is somewhat complicated. Likely, you now have a low insurance score as a result of your refinancing. What’s an insurance score, you may ask? It’s kind of like a FICO score, but one that insurance companies use.
When you refinanced, your insurance company took a look at your records and decided that you’re a higher-risk client because of your struggles with credit card debt. A low score can result from missing a few payments on your credit cards or routinely running a high balance on them.
I know, it doesn’t sound very fair—especially if you’re trying to be responsible and pay off your debt. But thankfully, it sounds as if your rate didn’t increase that much.
Let’s review some pointers about home insurance and refinancing:
- Inform your insurance company when you refinance. You’ll need to submit your homeowners declaration page to your lender, usually when you apply for the loan.
- Your coverage may need to increase. In some cases, your lender may expect you to increase your coverage. This may include adding on flood insurance or increasing hazard insurance limits.
- Consider shopping for a new homeowners insurer. While many people feel they have enough paperwork to do when refinancing, this may be a great time to shop around for a new insurer. You might wind up being pleasantly surprised!
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