A home insurance claim specifies a covered loss that unexpectedly occurs in your home. Examples of this include a fire or a break-in. What’s more, the claim tells your insurance company what happened, what was damaged, and how much money they will have to reimburse you to repair the damages.
Keep in mind that you need to file a home insurance claim right after a loss occurs. Before filing a claim, you should be aware of what your policy covers, how much coverage you have, and what your deductible is.
There can be a downside to filing too many homeowners insurance claims. Be aware that these claims stay on your Comprehensive Loss Underwriting Exchange (CLUE) report, which is comprised of five to seven years of claims history. CLUE enables insurance companies to assess how likely you are to file another claim. If you accumulate one too many claims, insurers can void your policy if they believe you and your home contain too much risk.
What’s more, you could expect to sustain a hike in your homeowners insurance premium after filing a claim, even if the cause of the claim is the result of an unexpected or accidental incident, which is precisely what home insurance is intended to protect against.
You may be surprised to know that just because you pay for home insurance does not mean your insurer is required to pay for fixes whenever you need them. It is helpful to know when NOT to file a claim, as this could save you the frustration of more expensive premiums, and surprise policy non-renewals.
When It’s Appropriate to File a Homeowners Insurance Claim
- The Cost to Repair or Replace Exceeds Your Deductible
Let’s say a major incident occurs, such as your roof caving in. The estimate for repair is $5,000 and your deductible is $1,000. In this instance, it is advised to file a homeowner’s claim with your insurance company. Your insurer can be especially helpful if you experience an expensive repair or replacement to fix your home, and it was caused by a covered loss.
- There is Significant Damage or a Total Loss
Your homeowner’s insurance is especially designed for an incident where your home suffers a loss so great that your dwelling is no longer inhabitable. In these situations, you should absolutely file a claim to recover your losses.
- It is your First Claim in Three Years
As insurers examine your claims history to determine what to charge for your premium, or whether they should even cover you. Insurance companies will be more likely to no insure your dwelling or void a claim if you have previously filed a claim. They assume you are more likely to file more claims in the future. It’s a good idea to let some time lapse between claims so they don’t pile up.
When You Should Not File a Home Insurance Claim
Here are scenarios when it is best not to file a homeowner’s insurance claim.
The Cost to Repair or Replace Does Not Exceed Your Deductible
The logic that goes into whether to file a car insurance claim applies to a homeowners insurance claim, as well. If your deductible is less than the dollar amount needed to repair the damage, you should opt to pay out of pocket instead of having your premium increased. A rule of thumb is not to involve your insurance company for minor fixes.
It is a Maintenance Issue or Normal Wear-and-Tear
Think of it this way, if you could have taken action to prevent the damage, your insurance will probably decline to cover it. As the homeowner, it is your responsibility to care for basic upkeep and maintenance. With this in mind, your insurer will not compensate you for wear-and-tear in your home. That is even the case if it ends up completely destroyed after a covered loss. For example, if your roof or fence is already in poor condition and worn after years of neglect, and then they collapse after a heavy snowfall, your insurance company will deny your claim since it could have been prevented if you properly maintained your property.
You Have Filed a Claim Within the Last Three Years
Insurance companies will be ambivalent to cover a repair or replacement if they see you have more than one claim filed within the past couple of years. That goes for claims that were not paid out, and if the claim was denied or unresolved. You also take a chance of having your policy non-renewed or even voided. You could have difficulty getting coverage elsewhere, as well.
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This article is for informational purposes only and does not contain legal advice.