We are buying a new home and shopping around for insurance. Although we've been through the process before (we currently own a home), I never realized that there were different tiers of Home Owner's insurance. The 2 core tiers are HO3 and HO5, with 5 being the more comprehensive. We've always had HO5, and have changed insurance companies twice in this home because of finding better rates. I've never even been offered HO3 before, but now 50% of the quotes I'm receiving are HO3.
HO3 rates are, understandably, less expensive than HO5. I'm wondering if we should start with HO3 to get through closing, at which time we're required to put down a full year's premium, and then upgrade to HO5 later. I'm not even sure that it will make a difference, but I thought I'd ask around.
- Am I right in thinking that it would be cheaper at closing to go with HO3, or will we just have to pay the difference in premium as soon as we switch to HO5 anyways? (Maybe this is bank/escrow dependent?)
- Will we be negatively impacted by signing up for HO3 with insurance company A and then ditching them for company B's HO5 plan later?