Before Filing a Claim, Ask Yourself These Questions

Even though homeowners insurance provides critical financial protection, no one enjoys paying insurance premiums. It’s no surprise that many people think about filing a claim with their homeowners insurance when life throws the inevitable curveball.

Not all claims are created equal, however. Understanding the specifics of your homeowners insurance policy and how claims can influence insurance rates will help you decide when it makes sense to file a claim.

If you’re not sure whether to file a claim, ask yourself these questions.

Is My Loss Covered?

If your home is damaged, the cause of the damage will often determine whether your loss is covered. Typically, for example, the following causes would be covered:

• Wind
• Hail
• Water (burst pipe)
• Theft
• Fire

Unless you have separate flood insurance, some types of water damage won’t be covered, nor will normal wear and tear or earth movement.

Insurance coverage will vary by state. For instance, losses due to sinkholes are covered in Tennessee and Florida. Also, some states mandate certain types of coverage.

The solution: Read your policy before filing a claim. This document will provide specific information about what is and isn’t covered. If you need help deciphering the details, contact your insurance partner.

What Is My Deductible?

Even if your loss is covered, it might be less than your deductible. Or it might not be enough to justify filing an insurance claim. A broken window or a few shingles blown off the roof can probably be repaired or replaced for not much more than your deductible.

After all, one of the best ways to save money on insurance is to raise your deductible—and to use those savings to pay for small losses out of pocket instead of filing an insurance claim.

Are There Policy Limits for My Loss?

If jewelry, guns, comic books and collectibles are stolen or damaged, they may only be partially covered, or not covered at all, in your policy. Most standard homeowners’ policies set limits on coverage for these items, as well as silverware, artwork and furs. Some companies also limit what they’ll pay for computers.

But if you’re a collector or technophile, don’t despair. A rider (extra insurance) can usually be purchased to cover those items.

Will My Premium Increase or Will I Be Dropped for Filing an Insurance Claim?

Deciding whether or not to file a claim may seem counterintuitive. You bought insurance to protect yourself from loss. Why shouldn’t you report a loss?

Insurance companies differ in how they determine an individual as an insurance risk. Still, it’s important to be aware that your insurance company will list the details of any claim in the Comprehensive Loss Underwriting Exchange (C.L.U.E.), a database that insurers share. (Note: Even denied claims go on your C.L.U.E. report.)

If you have too many claims in the C.L.U.E. database, insurers may either deny you coverage or charge you more. How many is too many? One rule of thumb is that more than one claim in a decade can be a red flag for insurance companies. Again, standards vary by company.

As an aside, some policies have financial benefits for homeowners who go a certain length of time without filing a claim. Check your policy for details.

Remember that homeowner’s insurance is designed to protect you in the event of serious or devastating loss; it’s not supposed to cover minor repairs or maintenance. Think carefully about filing smaller claims. When in doubt, your broker/agent should be able to advise you.

If you have any questions about insurance coverage or would like a free insurance review, please call us at 877-576-5200.