Although you may have a case to file a home insurance claim, it can be beneficial to do some research before starting the process. While the insurance company may cover part or all of your claim (less any deductible applicable to the coverage), it may not be in your best interest to have the insurance company pay for the damages in some circumstances. Any claim you file under your homeowners insurance policy can have a negative impact on your premium and could even prevent you from securing coverage in the future or limit your coverage choices if you plan to switch carriers.

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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 your premiums at your next policy renewal. Having repeat claims, even ones with low insurance payouts, might cause a property insurer to non-renew your policy. If this happens, you may only be eligible for high risk homeowners insurance, which is more expensive.

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 not be in your best interest . 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 or have $0 paid out 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 or lack of maintenance. 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. This is part of the risk assessment carriers use to determine if a policy should be renewed and whether the rate should change.

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. Having a completed and up-to-date home inventory can make this process easier.
  3. Make temporary repairs immediately, particularly when these will minimize any additional damage, such as with a leaky roof. Keep receipts of any materials you have to purchase, like a bucket or tarp, as you will probably be reimbursed for these items if your claim is approved.
  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. Working with a contractor that is in the provider’s “network” may make the claims process go faster, especially if a claim for supplemental damage is needed.

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.

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