According to the Insurance Information Institute, 5.1% of insured homes had a claim in 2019 (the latest data is available), with an average payout of $13,653.
Regardless of when you file a claim or how much is paid out, though, how does the process work? We’ll take a look at the facts you should know to ensure everything goes as smoothly as possible.
The first step is to decide whether or not it makes financial sense to file a home insurance claim.
For example, if you have a $2,500 deductible and learn that the damage will only cost $2,000 to repair, filing a claim doesn’t make sense.
Furthermore, filing a claim can remain on your insurance history and increase your premium for up to five years following the incident, so you’ll also need to factor in how much extra you’d pay over this time.
Additionally, keep in mind that if you report a loss to your insurance carrier, they might follow up to ensure that all necessary repairs are made. This could be the case even if the company didn’t pay anything toward your damages.
The exact process for filing a homeowner’s insurance claim can vary depending on the circumstances, but here’s a high-level overview of the process.
You won’t need to file a police report to support your homeowner’s insurance claim in many instances.
However, in instances where a crime has taken place (e.g., breaking and entering, theft, vandalism, etc.), filing a report with the police can help establish the circumstances surrounding your claim, including damage to your home and damaged or missing property.
Many police departments allow you to file an online report without ever involving a live officer, which can help everyone involved save time and streamline the process.
When it comes to a home insurance claim, a good rule of thumb is to contact the company’s claims department as soon as possible.
The Insurance Information Institute recommends asking the following questions during your call with a claims adjuster:
Upon filing your claim, the company will send you paperwork that you’ll need to fill out and return as quickly as possible. They’ll also set up a mutually agreeable appointment time where an adjuster can visit your home and formally assess the damage.
Most home insurance policies stipulate that you must make temporary repairs to avoid additional damage from occurring.
Examples include tarping your roof to prevent future water damage, boarding up broken or missing windows, or cleaning up potentially harmful debris that could cause a slip and fall accident to someone visiting the property.
The claims adjuster will need to know which items were damaged or destroyed due to the claim, which is where a pre-completed home inventory (including copies of receipts) can help speed up the process.
It’s also a good idea to keep copies of receipts for any additional expenses you incur (e.g., hotels, food, etc.) as a result of your claim.
Many insurance companies allow you to choose which professionals you use when it comes to repairing damage due to a claim. This way, you can contact these contractors directly to have them visit your property and provide estimates for repair costs.
Keep in mind that most insurance companies also work with “preferred” vendors with whom they have an ongoing working relationship and who might deliver the same repairs but at lower costs than “non-preferred” options.
After an adjuster has visited your home, completed the appropriate paperwork, and approved your claim, you’ll need to have any related damage repaired.
Keep in mind that the insurance company may cut two checks; one to you and another to the mortgage company listed as an additional insured under your home policy. This way, the carrier can ensure that all damage is repaired in a timely manner.
Depending on the type of claim you filed and the total payout, you might expect your home insurance premium to increase by 9% to 20% following your next renewal.
It’s important to emphasize that these numbers can fluctuate based on claim frequency (i.e., you’ll experience different increases if this was your first loss or your third). Also, because carriers report all claims to the Comprehensive Loss Underwriting Exchange (CLUE), losses will continue to impact your premium even if you switch insurance companies.
Like your overall insurance needs, whether or not you should file a home insurance claim depends on your needs, preferences, and many other factors.
The good news is that the team at IHS Insurance Group has decades of combined experience to help answer your questions and walk you through the process.
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