Feb 18, 2020
Filing An Insurance Claim Under A Homeowners Policy
Need to file a home insurance claim? The thought of a basement flood, a tree falling on your roof, or having your home burglarized is not something homeowners want think about.
But these are the realities of homeownership. There are risks. And with home insurance claims on the rise, a strong policy helps protect your investment and minimize these risks.
“Property claims as a percentage of total claims have risen significantly over the last decade,” says IBC. They have risen from 24.4% to 39.3% in a short period of time. Homeowners insurance claims statistics continue to show an increase in the number of weather related claims, especially water damage claims.
In this post we’ll talk about the home insurance claims process. You will get answers to common questions about how it works, what to expect, and get great tips and advice for managing the house insurance claim process.
What Happens When You Make A Home Insurance Claim?
Weather damage, accidents, thefts, and property damage happen. Knowing how to and when to file a claim is must know information for homeowners.
It’s not always as simple as just filing a claim. There is a cost to filing a claim that needs to be considered. Here’s what happens when you make a house insurance claim :
- Insurance record : Filing a claim will go on your insurance record.
- Deductible : You will have to pay your insurance deductible.
- Paperwork : You will need to compile an inventory of damaged/missing items, provide proof such as receipts, and images.
- Insurance rates : Your home insurance rates could increase upon renewal.
- Claim status : There is a chance your claim could get denied. Make sure you’re covered before filing.
Should You File A Home Insurance Claim?
There is a cost to making a home insurance claim. Whether or not you should file a claim can depend on many factors :
- The claim cost
- Your deductible amount
- Your claims history
- Your ability to pay for repairs out of pocket
- Loss of your claims free discount
In most instances, it makes more sense, and is less hassle, to pay for small damage out of pocket, especially if you have the money to pay out of pocket. Even small claims can have an impact on your rates. Significant damage and repair costs warrant filing a claim.
Consider all costs before choosing to file an insurance claim.
How Do Home Insurance Claims Work?
The premiums you pay for home insurance are pooled and used by insurers to pay out claims. When you file a claim, money is taken from the pooled money to cover the claim. You are responsible for paying the deductible amount, and your insurer will pay the remained of claims costs for included perils (subject to coverage limits).
Does A Claim Affect Home Insurance Rates?
A claim may or may not affect home insurance rates. If you have a clean claim record and have not filed a claim within the last five years, it should not affect your policy renewal.
Claims can affect home insurance rates and your ability to get coverage when :
- You file a significant dollar value claim
- You are a repeat claimer
- You file claims for damage that is not covered
- Your claim gets denied
How Long Do Homeowners Insurance Claims Stay On Your Record?
Home insurance claims typically stay on your record for 5 to 7 years. During this time, a claim can impact your home insurance rates. Your insurance claim record will follow you if you switch insurance providers.
How Do Personal Property Claims On Homeowners Insurance Work?
Your policy provides you with coverage for loss and damage to personal property or contents. This includes any personal belongings in your home such as clothing, furniture, electronics, and other common items.
Your home insurance policy will help you cover the cost to replace these items, subject to your policy limits and type of policy (home replacement cost vs actual cash value).
Personal property claims work similar to other insurance claims. After damage or loss due to home theft, fire, water damage, or weather events, homeowners will file a claim to recover the personal property. Personal property claims are separate from structural damage claims.
Note: personal items such as jewelry, art, and collectibles may not be included in your policy.
How Do You File A Home Insurance Claim?
The home insurance claims process
Filing a home insurance claim is a fairly standard process. Most insurance companies follow very similar steps. It is outlined here :
- Assess the situation : Take a deep breath and assess the situation. Do a quick overview of the damage. Take steps to prevent further damage (shut off the power) and protect your family. If your home is not safe, go outside. If a burglary took place, call the police to file a police report.
- Contact your insurer : Notify your insurance company as soon as possible. They will assist you with opening a claim. You will be assigned a home insurance claim adjuster to help you with the claims process. Your insurer can help you find local contractors to help you secure your property.
- Document the damage : Take pictures and video of all damage. Record everything in a home inventory document. Do not throw away anything until it’s been approved by your adjuster.
- Clean up : Hire a restoration company to help you clean up your property. This will be paid for by your insurer.
- Determine repair costs : Your adjuster will visit your home and assess the damage. Based on the initial assessment of damage, loss and repairs, you’ll get a homeowners insurance claim estimate. This number will change as you finalize your claim.
- Assess contents loss : Based on your home inventory your adjustor will assess and calculate a settlement value to replace your damaged contents.
- Repair damage : You can hire a contractor, or your insurer can suggest a company. Your home will be repaired.
- Finalize your claim : Once the restoration work is complete and you’ve been compensated for your contents you will sign forms to complete the claim.
What Is A Home Insurance Claim Form?
Home insurance claims forms, or proof of loss forms, are used to document to items that are lost or damaged. You will be required to provide specific information about each item being claimed. You will be asked about :
- The type of damage caused to your home or contents
- The items included in your claim
- Replacement value of the property or contents that are damaged
- Proof of the loss (photos, receipts)
What Are The Types Of Home Insurance Claims?
While the claims process is fairly standard, there are a number of types of house insurance claims you could file. They include :
- Property damage
- Water damage and flood
- House fire or lightning, smoke
- Weather damage
- Falling objects
- Wind and hail damage
What Reasons Could Your Home Insurance Claim Be Denied?
Filing a claim does not automatically mean it will be accepted. There are a number of reasons a claim can be denied. They include :
- Lack of coverage : Depending on the type of claim, you may not have coverage for a specific type of damage. Often basic policies exclude certain types of coverage.
- Lack of proof : You need proof of your claim. You need to show you possessed items and damage was caused. If you can’t, some or your entire claim could be denied.
- Uninsured peril : There are certain perils that are not included in your policy. Coverage for water damage, flooding, earthquakes and other weather events can be added as a separate policy.
- Poor maintenance : Homeowners are expecting to care for their home. Upkeep is your job. If damage is a result of neglected maintenance, your claim can be denied. For example, if you have roofing issues and don’t get them repaired and your roof collapses, you may be on the hook for the repairs.
- Intentional damage : Any intentional damage caused to a home by the owner will result in a denied claim.
Other reasons you claim could be denied is if you lied on your insurance application or you are late on paying your premiums.
House Insurance Claims Advice And Tips
Use these tips to simplify the claims process :
- Call your insurer as soon as possible : If you plan to file a claim, contact your insurer as soon as possible after the incident to open the claims process.
- Have a home inventory list : If you don’t have one already, consider creating a home inventory list. This will make filing a claim much easier.
- Everything adds up : Don’t short change yourself. Be thorough when getting estimates, and including contents in your claim.
- Get a quote from independent contractors : Even if the insurer provides a contractor, you can still use independent contractors to get a second opinion and compare repair quotes.
- Keep records of all communications with your insurer : Keep a record of all communications with your insurer. This will ensure there are no discrepancies.
- Get advice from your broker : Speak with your broker about your claim. They can provide you with advice and advocate on your behalf.
- Claim payouts are negotiable : Claims settlements are negotiable. Make sure you are getting a fair settlement to repair and replace your home and its contents.
Is There A Homeowners Insurance Claim Timeframe To Start A Claim?
Yes. The majority of insurance companies have a time limit where you must open a claim. The limit can vary from as little as three months up to one year from the date of the damage or loss. Check with your insurance broker to clarify the time frame within your homeowner’s policy.
Is There A Time Limit To Finalize A Home Insurance Claim?
Most insurance companies provide you with one year to open and finalize your claim. If you do not finalize your claim after one year your claim could be denied. Speak with your insurer about the claims process time limits in your policy.
Can My Home Insurance Be Cancelled After A Claim?
Yes. Your home insurance can be cancelled upon renewal after a significant claim. It’s unlikely your policy would be cancelled immediately unless they believe you engaged in fraudulent activities. Your policy may also not be renewed if you have a history of insurance claims.
What If I Can’t Get Homeowners Insurance Because of Claims?
Many insurers will not renew policies or offer coverage to homeowners with a history of insurance claims. Speak with a home insurance broker if you are having issues getting coverage. Brokers have access to insurance coverage for homeowners in all situations. High risk home insurance is also another option.
What Do I Do If My Home Insurance Claim Is Denied?
A denied home insurance claim can be gut wrenching. But, there are ways to resolve the situation. Here is what to do:
- Review the claim : Review the claim to see if you made any errors. Review your policy to make sure your insurance provider has grounds to deny your claim.
- Understand why : Review the reasons why your claim was denied. Claims can be denied for many reasons.
- Understand your options : You have the right to appeal the claim decision. Consider an independent appraisal.
- Contact the General Insurance OmbudService : You can get free advice and learn more about your options for filing a complaint.
- Get legal advice : If all else fails, contact your lawyer to get legal advice about your options regarding your claim.
Will A Home Insurance Claim Increase My Premium?
A home insurance premium increase after a claim is common. Losing out on your claims free discount will automatically increase your rates somewhat. Depending on the nature of your claim, your insurer may also increase your rates.
When Will I Get My Home Insurance Claim Check?
It depends on the type and scope of your claim. Some insurance companies will provide you with a series of checks as the claims process progresses. In other situations, you may be provided with a single settlement check once you’ve finalized your claim.
Can You Keep Home Insurance Claim Money?
Yes. While you are supposed to use home insurance claim money to repair your home and replace damaged items, you are free to use the money as you wish. Left over money from home insurance claims can be kept. However, it is advisable to use claims money for its intended purposes – to restore your home to its state prior to a loss event.
Will I Receive A Home Insurance Claim Cash Settlement?
Yes. You will receive a cash settlement for your insurance claim. How the settlement works depends on your preferences, situation and how your insurer processes claims. Some homeowners choose to take funds and pay contractors directly. Others choose to have the insurers pay contractors directly for repairs.
Home Insurance Claims FAQs
What are the most common home insurance claims?
Water damage is by far the most common type of home insurance claim. Fire and hail damage are a distance second and third respectively.
Can I get claims free discount for home insurance?
Absolutely. All insurance companies offer a claims free discount. Think twice about filing smaller claims. It may make more sense to pay for the claim out of pocket and keep your claims free discount intact.
What happens if I file false home insurance claims?
False claims and fraud are leading factors for rising insurance rates. If you are caught making false claims, providing deceiving information or purposely misleading insurers, your claim could be denied and your policy will be cancelled. Exaggerating or inflating the extent of a claim is a crime. Your insurer could also press charged against you for fraud.
How are homeowners insurance claims paid?
Homeowners insurance claims are paid by check. You may receive a single payment or multiple payments as the claim is processed.
How many claims am I allowed?
While there is no set number in your policy, the fewer the better. In most cases, 1 claim every 5 years is an acceptable amount. Too many claims could result in your policy not getting renewed.
How long do home insurance claims take?
The average time to settle a home insurance claim varies. Some can be settled in a few days, whereas more extensive claims can take over a year to settle. The length of time it takes to settle your claim will depend on the type of claim, extent of the claim, and many other factors.
Can I claim water damage on home insurance?
Yes. The majority of home insurance claims involve water damage. However, you may not be covered for certain types of water damage such as flooding or sewer backup.
How long can a home insurance claim stay open?
In general, a claim will stay open for one year from the date the claim was filed. Speak with your insurer for clarification about your specific policy details.
How many claims before home insurance cancels my policy?
It depends. You could have your policy cancelled after a single claim or after filing a series of claims within a short time period.
Will I have trouble changing homeowners insurance after a claim?
Homeowners may have difficulty changing home insurance providers after a claim. Working with a broker is your best option to explore your option and find the best coverage.
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