For most people, insurance is something they purchase but hope to never use. Unfortunately, we are not all so lucky. Storms come, accidents happen, and fires start.
When that time comes, you will need to be prepared to file a homeowners insurance claim and follow it through to its successful conclusion. Ideally, you are reading this guide before disaster strikes so you can take steps to make the claims process easier and less mystifying in advance. But even if you are currently staring at an oak tree trunk in the middle of your living room, you will be able to learn something and avoid making common—and costly—mistakes when filing a claim.
Your first step should be to wonder, “Do I really need to file a claim for this?” Small home problems, referred to as “incidentals” by many insurers, have the same deductible and potential to raise your premiums as a whole home replacement. Making frivolous claims or even requesting a claim that cannot be honored will trigger expenses that usually cause claims to cost more than they save. As for most things, there are right and wrong situations for filing an insurance claim.
In Connecticut, Minnesota, and Maryland, for instance, premiums can jump by as much as 21 percent for even one small claim. For someone paying a homeowners insurance premium of $1,000 a year, that $210 could go towards saving up for repairs or modifications that prevent home problems to begin with.
Every single claim you make during a seven-year period is stored within a database called the Comprehensive Loss Underwriting Exchange, or CLUE. Making three or more claims in a short period like three years can cause you to be flagged as high risk, making your insurance premiums go up.
So to save yourself some trouble, keep your deductible higher than $2,000 and save up for emergencies rather than trying to fall back on your insurance for minor issues.
Raising your deductible can also lower your rates. Find out how much you could save when you compare quotes from several different insurance companies.
Review your policy every year or every time you switch carriers. Look on the “declarations” page to find out the types of incidents that are covered and what the maximum value you would expect to get from a claim is. Even if that oak tree has already become an unwelcome addition to your home, you should take the time to glance over your policy and see if your problem is covered with enough compensation to be worth a premium increase.
Remember that asking an adjuster to come out, only for them to discover your claim cannot be covered, still counts as an official filed claim in your CLUE record. Your insurance agent also has the right to open an official file even if all you are doing is asking questions about a potential claim. Keep your claim history low by avoiding uncovered claim requests and emphasizing to your agent that your questions are theoretical.
Also be aware of whether or not your policy covers actual cash value or replacement cost, since the difference could be in the thousands.
You will want only the most knowledgeable and reliable contractor to perform repairs on your home after it gets damaged. Try to seek one out before anything happens to your house to ensure that you will be able to get the best work possible when the time comes.
Waiting until there is a hole in your home could make the search more difficult. After major storms hit in particular, the best contractors will be all booked up and they may not be in the mood to entertain bid requests from unfamiliar clients.
Additionally, being a regular customer of a contractor could help you stay on top of maintenance that lessens the chance of damage to your home in the first place.
A dependable contractor will be able to make an accurate estimate, then perform the work correctly both on-schedule and on-budget. Untested contractors may make a bid, only to find out after you received your settlement check that the job will cost more than they thought. You could end up having a home lien or paying out of pocket if you have already accepted an insurance settlement.
If you wait until the claims adjuster is at your home, they may assess your repair costs based on the lowball bid of the second guy. The adjuster could also miss some of the damage or underestimate the extent of necessary repairs.
Call your preferred contractor to come out for an inspection before the adjuster gets there, and ask them to put their detailed assessment in writing to help strengthen your claim. In some instances, you may even want to have the contractor come inspect and make an estimate to see if a claim will be worth the money to begin with. Just be prepared to explain to your insurer why they were not the first to know about your damage.
If you have reason to suspect that you have been the victim of theft, or your property damage was the result of criminal activity, call the police immediately. Waiting to file a police report could place your claim under suspicion or slow it down. Obtain a copy of the police report and find out ways to get in touch with the responding officer or their department in case you need to ask follow up questions.
In scenarios like the one above, it's helpful to distinguish whether or not a claim should be filed.
Your first step after calling your insurer and your contractor should be to begin documenting the damage as-is. Take clear, well-lit photos from as many angles as possible. Use a ruler or a dollar bill to give a sense of scale to close up pictures like hail damage, and use wide shots of an area to give an idea of where the damage is located relative to other rooms.
Using video can also help rule out any ambiguity for the accuracy of your photos.
Your mortgage lender will likely be part of the settlement process if you do not own your home in full yet. Often, they will hold the insurance settlement in escrow and release it in installments to ensure that the homeowner is actually using the money to repair the home.
Ask your lender how they handle insurance claims, and call them any time you need to open a new claim for property damage.
After getting a contractor’s opinion or doing your own research, be prepared to present to the adjuster in writing your personal assessment of the damage. You will help make sure that they do not miss crucial details or underestimate the extent of the necessary repairs.
Be extremely careful about what you say to the adjuster, though. Never forget that they work for the insurance company and not for you. You want to avoid giving them information that would allow them to reduce your claim or avoid paying it out altogether. Answer their questions truthfully and politely, but never tell them more than they asked in order to have the insurance company paying for all or most of the claim.
Most importantly, never admit fault! For instance, saying things like, “We knew that tree would fall some day!” for a tree on your property could be enough to cause the adjuster to reduce your claim or deny it outright.
The moment you file a claim, you and your insurer are practically adversaries. Your carrier will want to pay the smallest amount possible, and you will want the highest amount. This fact is not meant to scare you, but it can inform your decisions or help explain much of your insurer’s behavior.
Those that have friendly, unargumentative insurers should count themselves lucky. Even then, the company has the right not to renew your policy for almost any reason following a claim.
Never be hostile with your insurer, but recognize the fact that part of their job is to not make receiving a full claim easy for you.
The key to making claims as painless as possible is airtight documentation.
Part of the terms of a settlement is that your claim is closed and you cannot legally contest it anymore, and the homeowners insurance claim process can go in or against your favor. Insurers will sometimes try to wiggle out of a full claim with a lowball offer or a pre-emptive settlement offer to prevent you from discovering the full value you are owed.
Opting for the path of least resistance will usually end up costing you more time and money in the long run. Be patient, be firm and realize that accepting a settlement is a permanent decision.
Public adjusters are third parties that can help you dispute a claim. Lawyers can also get involved if your insurer intends to drag out your settlement or deny you your fair share. Keep in mind that both of these parties should be licensed and have a good reputation. Also, keep in mind that you will end up having to share your settlement with these third parties, often around 10 percent to 15 percent or higher.
Do not let your claim fall by the wayside. Your insurer should resolve the process in a timely manner. Follow up around once a week, and have your claim number and your adjuster’s name ready.
Also make sure to be aware of any deadlines, required forms or other actions. Failing to keep up with your obligations could jeopardize your entire claim.
Before you ever get to the point where you need to file a claim, find a homeowners insurance carrier with a reputation for great customer service. Companies like Amica, USAA and Auto Owners have glowing reviews from customers who had their claims honored quickly and with as little hassle as possible.
Remember that the cheapest insurer isn't always the best. Using QuoteWizard’s online quote request form, you can talk to several live insurance agents to not only find the best price, but the best coverage and the best service.
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