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When to file a home insurance claim

When to file a home insurance claim
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When deciding to file a home insurance claim, you will want to balance the advantages of being paid the cost of repairs by your property insurer against the longer-term impact a claim may have on future coverage and premiums. An adverse claim history can seriously impact on the cost of future coverage and even on one’s ability to obtain homeowners insurance with some insurers.

What is a homeowners insurance claim?

A homeowners insurance policy is a valuable form of financial protection that every homeowner should consider having in place. If your home has a mortgage, your lender will require that you insure your home, but even if your home is owned free and clear of any liens, the broad protection for your dwelling and personal property afforded by a homeowners policy is an important component of your financial well being. Although not designed to cover maintenance expenses, filing a homeowners insurance claim under the right circumstances may help you better manage a significant loss.

When to file a home insurance claim

Simply because there has been damage to your property does not automatically mean that you should file a claim against your homeowners insurance policy. You should consider factors to determine if filing a claim is the best course for you in the long run.

The estimate is more than your deductible

If the cost to repair damage to your home or the replacement cost of a damaged household item is only slightly higher than your policy deductible, you should consider paying these costs yourself. Every time a claim is filed, it is reported to the Comprehensive Loss Underwriting Exchange (CLUE). All carriers review this database, and a claim may increase premiums. Having repeat claims, even ones with low insurance payouts might cause a property insurer to non-renew your policy.

The damage is covered and extensive

Homeowners insurance is not intended to cover everyday maintenance or minor repair costs. Your homeowners insurance is designed to cover significant and unexpected, sometimes catastrophic, losses. These are the events that should generate a claim. For example, a fire in your home is often this type of serious occurrence and will typically be the right catalyst for filing a claim.

You have an endorsement for the damage

An endorsement is add-on coverage to give you coverage for something a standard home insurance policy does not normally cover. Endorsements can even extend coverage limits above what a standard policy offers. These “add-ons” increase your premium, sometimes only slightly, and may even come with a separate deductible. Jewelry coverage and sewer backup are just two endorsements commonly added to homeowners policies. When the damage incurred is covered by an endorsement, it might make sense to file a claim because these are typically costly repairs.

When not to file a home insurance claim

As alluded to above, there are a number of situations where filing a homeowners insurance claim might be a poor choice. In these situations, paying the cost of repair or actual cash value of a destroyed item yourself when possible can save on premiums and prevent more serious problems with future coverage.

The damage is minimal

Any claim, even a very minor one, may lead to an increase in your home insurance premium. Your insurer will deny any repair or replacement costs below your deductible. Claims that have repair costs only slightly higher than your deductible should probably be avoided as your insurer won’t cover much of the claim, and you risk a premium increase.

Your policy excludes the damage

You don’t want to walk right into a problem by filing a claim which you are fairly certain will be denied. Even claims that are denied are reported to CLUE and therefore may have a negative impact upon the premiums you will pay in the future. Filing a homeowners insurance claim is not a “nothing to lose” proposition. Do your research on your policy exclusions, and where possible, consider getting the advice of an insurance agent before you file a questionable claim.

The damage is from normal wear and tear

Homeowner insurance policies consistently include “failure to maintain” exclusions which give the carrier the right to deny the claim based upon negligence. For example, if you have a seriously damaged and leaking roof that resulted from your failure to replace shingles that led to the bigger problem, your carrier will likely deny your claim.

You have several recent claims

Filing a series of claims within a relatively short time frame can significantly raise eyebrows with underwriters and lead to higher insurance rates or a policy non-renewal. A homeowner with multiple claims on their record can cause carriers to assume that another claim will likely be filed.

How to file a home insurance claim

Filing a home insurance claim is a process that requires a deliberate step-by-step approach. The diligence adopted in preparing and supporting your claim may impact your chances of obtaining full recovery. It is important to understand how to file a home insurance claim. Depending upon the nature of the claim, these steps in the process may be appropriate:

  1. Contact your homeowners insurance company as soon as possible and carefully complete and submit the required claim forms.
  2. Gather all documentation that supports the claim, including photos and all receipts for expenditures.
  3. Make temporary repairs immediately, particularly when these will minimize any additional damage, such as with a leaky roof.
  4. Prepare for the visit by the assigned insurance adjuster and answer all questions honestly and thoroughly.
  5. Obtain replacement, repair or rebuilding estimates from reputable contractors.

Initially, setting up your policy with a homeowners insurance company with positive reviews for their claims experience may be a good decision to help you have a good experience when filing an insurance claim.

Frequently asked questions

How long does it take to process a home insurance claim?

This time period will vary depending upon various factors, including state and local laws and the location of your home. Most importantly, the time frame will depend upon how prompt and thorough you fill out claim forms and providing detailed supporting documentation. Do not be hesitant to press the issue and ask your carrier to complete the process as soon as possible.

Do homeowner insurance carriers deny most claims?

There are many reasons why a carrier may deny a claim, but every denial must be based on specific language included in your homeowners policy. It is not fair to generalize and say that all carriers will look first to ways to deny a claim but should your claim be denied, you should speak in detail with your claims adjuster to make sure you both are on the same page with what happened to cause the loss.

Written by
Rick Hoel
Insurance Contributor
Rick Hoel is an international business attorney and legal and insurance writer for Bankrate as well as Reviews.com and Accessibility.com. Over the last several years, he has covered topics dealing with personal and commercial insurance and technology and the law. Rick is General Counsel and Director of Risk Management and sits on the Board of Power Stow Americas Inc., a subsidiary of Power Stow A/S in Denmark, the world leader in the supply of tracked conveyor systems to the airline industry.
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