When Should You File a Home Insurance Claim? Here’s a Quick Guide
Paying for home insurance is akin to creating a safety net for your home and belongings in the unfortunate case that they suffer major damage in something like a natural disaster and require repair or placements. Then why should you not make a claim when something happens?
Although it sounds strange, sometimes it is better to not file a claim if it will not be worth it in the long run. There are more factors in play that should be considered before you decide to file a claim.
Repair & Replace Cost vs. Your Deductible
It is important to consider what the actual cost of the damages will be and how they compare to what you will pay out of pocket. If the price of a repair or replacement is close to what you would pay for anyway after the out-of-pocket costs associated with your deductible (and the resulting rise in premium for the next few years as a result of your claim), then it might be worth it to consider holding off on filing a claim with your insurance company.
It is not worth it to affect the premium price on your policy for small repairs, since filing a claim will almost certainly result in a higher premium payment going forward. When you add up the increased cost, you will more than likely end up paying more. Most insurance companies track the number of claims filed. If it is determined that you are more likely to file claims, the company will penalize you with higher premiums.
Are You Covered?
Another factor to find out is if the event that caused the need for repair falls under your coverage. It really is upsetting to file a claim only to get denied, and then turn around and still get a new report added to your CLUE record. To avoid something like this, you should review your policy and make sure that you are covered before filing that claim.
Reading your insurance policy might seem like a hassle, but it will educate you on your insurance company’s coverage and save you money in the long run. It should be noted that you should pay close attention to what your contract excludes from their coverage as this will be easier to digest, and under normal circumstances, it is safe to consider that anything not in the excluded section should be covered.
In the case that you are unsure, even after reviewing your coverage, then you should contact an expert to better assess your situation.
Possible Negative Effects of Homeownership Claims
Insurance companies base how much they charge a client (premium) on how likely it is that said client will file a claim. That is because an insurance company takes on the risk of claims being filed and offsets it with premiums collected, so a client that is very likely to submit a claim will need a high premium to be insured.
Submitting too many claims too quickly or unnecessarily may have negative effects, including higher premiums, cancellation or nonrenewal of your contract, and increased difficulty in finding a reputable insurance company in the future. This puts you at risk of being uninsured, which may place you in financial danger if anything occurs in your home without a safety net.
Homeowners should consider these possibilities when thinking about if a claim is worth filing or not.
Filing a Claim
You should be prepared to file a claim if the charge for repairs is high enough to warrant the potential negatives. In other words, if you will end up paying more for repairs and replacements than you would with potentially higher premiums.
It is important to call the police if the nature of the claim is criminal in any way. This will also be helpful down the line when you submit a claim. You should also call your insurance company at this time to let them know what exactly happened so that they can send someone to inspect the property.
Be sure to document everything relevant to the situation, even the small things. This includes taking photos of everything and keeping receipts for any temporary repairs you make yourself. It is also important to contact an assessor of your own to get an inventory of what needs repair before the insurance company’s assessor shows up. This is so that there is a second opinion on the repairs, and nothing is missed.
After your insurance company has fulfilled its side of the contract, you should be sure that everything was done according to the settlements and statements given to you. Mistakes do occur in these situations, and you are the person with the greatest interest that everything turns out perfectly. If you feel that everything went well after you decided it was worth it to file a claim, and you kept on top of your case, then you have done everything you needed to do to protect your home.
