After home damage, working with insurance can feel stressful. There are things that have to be done in order for insurance to pay for repairs and replacements. Filing a claim is the beginning of that journey. We’re here to help with 5 things you should know about making an insurance claim.
File It Quickly
- When dealing with damage and loss the burden of proof is in your hands. The gathering of information needed to file a claim will be a lot easier with it all fresh in your mind. Preventing further damage is also your responsibility. If you choose not to take precautions against subsequent damage, then your insurance company may make you pay for additional repairs. Waiting too long may put you at risk of a denied claim or more money out of your pocket.
- Insurance companies will clearly outline their time limits in your policy. After a claim is filed, they then have 30 days to investigate the claim. Time is imperative in the claims process as insurance companies want to minimize potential damage and protect the overall structure of the home. Be sure to get all documentation in on time. Extensions and forgiveness for late items may not be granted.
- Laws are regulated by states and that can also affect the time limits on filing a claim. But, it is important to note that insurance companies will most often set their own time constraints and they will be clearly listed in your policy. Some companies may give 30 days, others may give up to a year. Paying close attention to your policy and calling your agent with questions is key.
Know Your Deductible
- Knowing your insurance policy will be extremely helpful when it comes to making decisions about a claim. The first thing you need to consider is if the cost to fix the problem is more than the cost of your deductible. Remember, your deductible is what you are required to pay out of your pocket before insurance will pay their portion. If your deductible is higher than what it will cost to make repairs or replace a damaged item, then it may be better to pay those expenses on your own and not file a claim.
- Whenever you file a claim you run the risk of your annual premium going up. In fact, David Shaffer, an insurance expert affiliated with United Policyholders Group, suggests to “not claim the small stuff” and to use home insurance only for major losses. He recommends setting your deductible to $5,000 and to not claim anything below that amount. He offers other insights and recommendations here.
- If you do decide to move forward with a claim, you may be able to take advantage of a loss-free or claims-free credit. Not all insurance carriers offer this discount and you do have to qualify. It is typically available to those who have not made a claim in the last 3 to 5 years. Once you make a claim you will likely not be eligible again for the credit discount.
- Keeping extra insurance money, not paying your deductible, using your claims check for other things, or replacing or upgrading things that were not part of the damage of the claim, is considered insurance fraud. These can cost you a fraud charge, criminal record, or denial of future insurance across the board including health, car, etc.
Your Insurance Rate May Go Up
- Anytime you file a claim there is a chance that your premium rates will increase when your policy comes up for its annual renewal. There are factors that determine these hikes including the cause of the claim, if you have previous claims in the last few years, the cost of the claim, and your current state of residence. When deciding whether to make a claim you should take a possible rate increase into consideration. Unless it is a substantial loss, it may make more sense, in the long run, to pay for damages yourself.
- It is also important to note that your history of any and all claims you have ever made will be included in a database called CLUE (Comprehensive Loss Underwriting Exchange). All insurance companies have access to this database and can view your insurance claims history to determine premium rates and whether they will choose to insure your home. A history of several claims in a short period of time can mean higher premiums or an inability to find a company that will insure you.
Too Many Claims Has Risks
- Making multiple claims over a period of two to three years can put you at risk of being denied renewal of your insurance policy. Insurers are all different and there are typically no specific rules in a contract designating whether a provider can choose to renew your policy. If you do get dropped, then your previous claims may make it difficult to obtain insurance with a new provider and the chances are high that you will be paying more on your premium.
- Dropping a policy and choosing not to renew a policy are two different scenarios. Insurance companies cannot cancel your policy more than 60 days after it was purchased. The only way they can cancel early is if there is a failure to pay premiums, fraud, significant altering of the home, or if the home is not occupied. When your policy comes up for annual renewal your insurer can decide due to claims made that they no longer want to take on the risk of insuring your home and can then choose not to renew.
After damages you want to know the fastest and most efficient way to get back on your feet. Dealing with insurance can be stressful. Knowing some of the ins and outs of filing a claim can make the process go smoothly.
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