When to file a home insurance claim and how to do it
Key takeaways
- Filing a home insurance claim might make the most sense when the loss estimate is more than your deductible.
- Any claim, even a minor one, might lead to an increase in your home insurance premium.
- Having frequent or repeat claims could cause a property insurer to nonrenew your policy or view you as high-risk.
Home insurance is designed to help you afford repairs and other costs you normally can’t pay for on your own after your home or other property is damaged or destroyed due to a covered reason. But, just because something breaks doesn’t always mean you need to file a claim. In fact, filing too many claims can be a red flag to your insurance company; if you have a lengthy claims history, you could end up getting dropped from your policy. In general, it’s only worth filing a claim if the potential repairs are significantly higher than your policy deductible. For more minor repairs, you may be better off paying out of pocket.
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What is a homeowners insurance claim?
A homeowners insurance claim is how you can get reimbursed for covered losses in your home or on your property. After a loss happens, you can start the claims filing process in multiple ways, either over the phone, in person with your agent, through your online account or through many carriers’ mobile apps. The process can differ by insurance company, so familiarize yourself with your insurer’s process options after getting your policy.
Filing a homeowners insurance claim under the right circumstances may help you better manage a significant loss, and keep you from shelling out too much of your hard-earned money.
When to file a home insurance claim
Damage occurring 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 may want to consider paying these costs yourself. Every time a claim is filed, it is reported to the Comprehensive Loss Underwriting Exchange (CLUE), a national database insurers use to track claim activity. 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 nonrenew your policy. Frequent or repeat claims over time may make you only 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. It is designed to cover significant and unexpected, sometimes catastrophic, losses. These are the events that should generate a claim. For example, hurricane wind damage or a fire in your home often result in extensive damage and will typically be the right catalyst for filing a claim.
You have an endorsement for the damage
An endorsement is add-on coverage, providing financial protection 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 to repair damage or replace items 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 likely 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 that 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 on 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 nonrenewal. 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. Even denied claims can be considered a negative factor when insurers determine you have an excessive level of claim activity.
How to file a home insurance claim
It is important to understand how to file a home insurance claim. The diligence adopted in preparing and supporting your claim may impact your chances of full recovery. The process requires a deliberate step-by-step approach:
- Contact your homeowners insurance company or agent as soon as possible and carefully complete and submit the required claim forms.
- 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.
- 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.
- Prepare for a visit by the assigned claim field adjuster and answer all questions honestly and thoroughly.
- 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 beneficial and improve the odds that you have a good experience when filing an insurance claim.
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