As such a valuable investment and an important part of your life, if something happens to your home, it can feel like the end of the world.
Half of the stress of a claim is in the unknown of what to expect during the claims and repair process. If you get familiar with the steps below, you can relax a little on the road to returning your home to normal.
If you’re in the midst of a catastrophe, the first thing you’ll want to do is try to stop any further damage.
Make sure you and your family are safe and clean up the best you can to stop any further damage.
If you don’t do this, your insurance company may decide some of the damage you received could have been prevented, and won’t pay you entirely.
Be sure to save any receipts/invoices/pictures of initial damage you may acquire from the cleanup work so you can submit them later as part of the claim.
Once everything is under control, you can start to …
Take detailed notes of what happened, what was damaged, and if anyone was involved.
Take multiple photos of any and all damage (from a few different angles if possible.)
If your home is burglarized, you’ll also need to file a police report.
The more detailed information you have, the easier the insurance claims process will be down the line.
Decide whether you want to file a claim:
At this point, you will decide whether you even want to file a home insurance claim.
You may be thinking: “Of course, I want to file a claim. This is what I pay for home insurance for!”
Not so fast. There are a few scenarios when you would be better off paying for the damage out of pocket instead of filing a claim. Here are a few things to consider when deciding.
What does your insurance cover?
In some cases, you may realize that your insurance doesn’t even cover the damage you received. Home insurance has some limitations and exclusions which could prevent you from being eligible for payment.
Here’s an overview of what home insurance does (and doesn’t) cover.
What it covers:
- Storm damage (unless it is gradual)
- Fire damage
- Sudden or accidental discharge damage (such as from a burst pipe, water heater rupture, or washing machine or equipment failure)
- Overflow damage (from clogged toilet/sink/tub)
- Sewer backup or water backup (available at an additional cost)
- Service line coverage (available at an additional cost)
- Equipment breakdown coverage (available at an additional cost)
- Earthquake damage (available at an additional cost)
What isn’t covered:
- Flood damage (you’d need a separate flood insurance policy)
- Earthquake damage
- High-risk dog breeds
- Wear and tear/damage from lack of maintenance
- Damage caused by pests
- Intentional bodily injury or property damage
For more detailed information on home insurance coverages, check out this article: What Does Homeowners Insurance Cover?
What is your deductible?
Another factor that will play a role in your decision on whether to file a claim is your deductible.
Each home insurance policy has a deductible (which will either be $1,000, $2,500, $5,000, 1%, or 2%).
If you file a claim, you will have to pay the deductible before the insurance company pays you for the claim.
This means if the damage costs less to repair than the deductible, you wouldn’t want to file a claim because it would actually cost you more.
There may even be some cases when the damage cost exceeds your deductible that you may not want to file. Having claims on your insurance record may increase your premium, so if damage exceeds your deductible by a small amount, filing a claim can actually cost you more money in the long run. If the claim is a couple of hundred dollars over your deductible, we usually wouldn’t recommend filing a claim, but it depends on your deductible amount and how much you’re comfortable with paying out of pocket.
If you aren’t sure what your deductible is, you should contact your insurance agent. They can also help you decide whether it will be worth it to file a claim if you’re on the fence.
Call your insurance agent:
If you’re planning on filing a claim, you will need to contact your insurance agent as soon as you are able to.
They will gather all the information you collected, ask you a few questions, then get to work on filing the claim with your insurance carrier.
Work with an adjuster:
Your insurance agent will then file all of this to your insurance company who then assigns you an adjuster.
That adjuster will assess the damage, confirm that all the details you reported are correct, and determine if the loss is covered by your policy.
Get damage estimates:
Once the adjuster evaluates your damage, you should set up some appointments with contractors to get estimates on the damage.
If you have accurate estimates of the damage, you may be able to use them to negotiate your claims settlement amount if your insurance company doesn’t offer to pay enough.
Wait for settlement:
Once your claim is approved and you and the adjuster have agreed to the payout amount, the insurance company will send you a check for that amount.
Many claims take a few weeks or a month to pay out, but we’ve also seen some take up to two years.
How you will receive your home insurance claim payment
If you were expecting to receive all the settlement money at once, unfortunately, you would be wrong.
First, your adjuster will cut a check for the actual cash value of the damaged items. This is the cost of the items that were damaged. You will use this check to repair or replace the damaged items. However, because you’re replacing your old items with new items, the cost will probably exceed the amount of the actual cash value check you received.
Once you do the work to repair or replace the items, your insurance company will send you a check for the remaining replacement cost.
Insurance companies won’t just send out a check to cover everything right away because they want to make sure the homeowners aren’t just taking the money and running instead of actually doing the repair/replacement of items.
Stay calm during the home claim process:
If you’re unfamiliar with how to file a claim, the process can truly feel like a whirlwind when it happens to you.
However, there is one other part that could get stressful: if you find out certain things aren’t covered. Your home and possessions can change year to year, and if your insurance doesn’t adjust accordingly, you might realize your limits aren’t high enough or certain items are excluded from coverage. Communicate with your agent and review your personal insurance policies annually.