When to File a Homeowners Insurance Claim
It might seem like nothing could be worse. After a natural disaster, you find that the years and money you have spent buying and maintaining your home has been washed away. Unfortunately, if you are not savvy enough to deal with your homeowners insurance, your devastation might not be at an end. While not all insurers are out to deny every claim, they are all out to keep their profits high, which can automatically put them at odds with your best interests. Knowing when to file a homeowners insurance claim and how, could save you money when it comes to fixing or replacing your home after a disaster.
Filing a home insurance claim can have drawbacks, depending on the type and amount of damage caused to your house and the coverages allowed within your policy. It is important to first know what the consequences and benefits of filing a home insurance claim could do for you and your family.
Like credit bureaus, the insurance industry has a system to evaluate your risk as a policy holder. Insurance companies base your rates off of the likelihood of you filing a claim. To calculate this risk, they use the Comprehensive Loss Underwriting Exchange (CLUE). CLUE works much like a credit report, but instead of debt, it tracks all of the insurance claims you file. If you file three or more claims within seven years, you are likely to be flagged as “high-risk.”
These claims do not have to be major to affect your policy rates. Even small claims or incidentals (expenses related to being displaced from your home, such as hotel fees, food, etc.) can raise your rates to the point that it would have been cheaper to pay for those costs out of pocket.
You can request a copy of your CLUE report annually for free by calling the toll-free number 1-866-312-8076.
Review Your Policy
So how do you know when filing a home insurance claim is the best course of action? First, make sure that you are covered by your policy for the type of damage. Most home insurance policies cover storms, fires, theft and vandalism, while also excluding flooding, landslides, earthquakes, power failure and mismanaged repairs. If you file for a type of damage that is not covered under your policy, your insurance company can still raise your rates despite not giving compensation.
Once you have verified that you are covered, take the time to get multiple estimates for repairing or replacing the damage. You will want to move quickly, as most insurers have strict deadlines for filing claims after the incident — typically within two weeks. If the estimates are higher than your deductible, it’s probably an indication that you should file the claim.
To get the most out of filing a home insurance claim, you will want to keep detailed records of everything related to the damage. This could even include keeping an inventory list of the major items and appliances in your home before damage occurs, so that you can accurately assess how much you have to replace in the event of a natural disaster. On this list, you may want to include the following:
- Description of the item
- Age of the item
- Serial number
- Cost to replace item
Keep any quotes or estimates that you receive from contractors, as well as receipts for any expenses related to the damage. Do not throw anything away or make repairs without taking photos of the damage first, and even write down any phone conversations you have with your insurance company.
There is one case when you will always want to file a homeowners insurance claim: if someone has been injured on your property. Even if it seems to be a minor injury, report the accident to your insurer. This will help you if the person or their family decides to file a personal injury suit against you.
KBG’s personal injury and wrongful death team are here to help you. Contact KBG today for a free consultation.