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Home insurance is designed to help you cover repairs and other expenses that you normally can’t afford yourself after your home or other property is damaged or destroyed for a covered reason. But just because something breaks doesn’t mean you have to file a claim. In fact, filing too many claims can be a red flag for your insurance company. A long claims history could get you dropped from your policy. Generally, filing a claim is only worthwhile if the repair costs significantly exceed your insurance deductible. For more minor repairs, you may be better off paying out of pocket.
What is a Homeowners Insurance Claim?
A homeowners insurance claim is how you get compensation for a covered loss to your home or property. After a loss occurs, you can start the claims process in a variety of ways, including over the phone, in person with an agent, through your online account, or through many insurance companies’ mobile apps. The process can vary by insurance company, so make sure you familiarize yourself with your insurance company’s processing options after you sign a policy.
Filing a homeowners insurance claim under the right circumstances can help you better manage a major loss and avoid paying much of your hard-earned money.
When should you file a home insurance claim?
Having damage to your property doesn’t necessarily mean you have to make a claim against your homeowners insurance, and you’ll need to consider a number of factors to determine if making a claim is your best bet in the long run.
The quote exceeds the deductible
If the cost of repairing damage to your home or replacing broken household items is only slightly more than your insurance deductible, consider paying these costs yourself. Every time a claim is filed, it is reported to the Comprehensive Loss Underwriting Exchange (CLUE), a national database used by insurance companies to track claims activity. All insurance companies check this database, and any claims may increase your premiums at your next policy renewal. Even if your claims are low, repeated claims may cause your property insurance company to not renew your policy. Frequent or repeated claims over a long period of time may result in you only being able to receive higher-risk homeowners insurance, which is more expensive.
The damage is widespread
Homeowners insurance does not cover routine maintenance and minor repair costs. It is designed to cover significant, unexpected, and sometimes catastrophic losses. These are the events that should give rise to a claim. For example, high wind damage from a hurricane or a house fire often result in significant damage and are usually the right trigger to file a claim.
You have insurance against damages
Riders are additional coverages that provide financial protection for things not normally covered under a standard home insurance policy. Riders can also increase your coverage limits beyond those offered in a standard policy. These “extra coverages” may increase your premiums slightly and may also have separate deductibles.
Jewelry coverage and sewer backflow are just two coverage clauses that are often added to homeowners insurance policies. If the damage that occurred is covered by a coverage clause, it may make sense to file a claim since these are usually expensive repairs.
When not to make a home insurance claim
As we touched on above, there are some situations where filing a homeowners insurance claim might not be in your best interest. In these situations, paying for the costs of repairing the damage or replacing items yourself, if possible, can save you money on your premiums and prevent more serious problems from arising on your coverage in the future.
The damage is minimal
Even very small claims can lead to an increase in your home insurance premiums. Insurance companies may deny repairs or replacement costs that are below your deductible. Claims where the repair costs are only slightly above your deductible should probably be avoided, as your insurance company will not cover much of the claim and you risk higher premiums.
Your insurance excludes damages
You don’t want to get yourself into trouble by filing a claim that you’re sure will be denied. Denied claims and claims that pay $0 are also reported to CLUE and can negatively impact the premiums you pay in the future.
Filing a homeowners insurance claim is not a “nothing to lose” situation. Research your policy’s exclusions and, if possible, consider getting the advice of your insurance agent before filing a questionable claim.
The damage is due to normal wear and tear
Homeowners insurance policies always include a “failed maintenance” exclusion, and insurance companies reserve the right to deny claims due to negligence or lack of maintenance. For example, if you neglect to replace shingles and your roof becomes so damaged that it starts leaking, which causes bigger problems, your insurance company may deny your claim.
There have been some complaints recently
A series of claims in a relatively short period of time may raise insurers’ concerns and lead to increased premium rates or denial of policy renewal. For homeowners with multiple claims on their record, insurers may assume that another claim will likely be filed. This is part of the risk assessment that insurers use to determine whether their insurance should be renewed and whether their rates should change. Even denial of a claim may be viewed as a negative factor if the insurer determines the level of claims activity is too high.
How to file a home insurance claim
It’s important to understand how to make a home insurance claim. How diligent you are in preparing and supporting your claim can make or break your chances of receiving full compensation. The process requires a careful, step-by-step approach.
- Contact your home insurance company or agent as soon as possible and carefully complete and submit the necessary claim forms.
- Gather all documentation to support your claim, including photos, receipts for expenses, etc. A completed and up-to-date inventory will make this process easier.
- Make emergency repairs immediately, especially if they will minimize additional damage, such as a leaking roof. Keep receipts for any supplies you need to purchase, such as buckets and tarps. You may be reimbursed for these items if your claim is approved.
- Prepare for your claim field adjuster’s visit and answer all questions honestly and thoroughly.
- Obtain replacement, repair, or rebuild estimates from reputable contractors. Working with contractors in the provider’s “network” may speed up the claims process, especially if you need to claim for additional damages.
Initially, it can be beneficial to purchase a policy with a homeowners insurance company that has positive reviews about their claims experience, increasing the chances of having a good experience when filing a claim.
