Homeowner foresight beats hindsight: Insurance Claims 101

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Published Date 10/11/2024

Whether it’s a hurricane, a tornado, a fire, or even roof cave-in from a fallen tree, any home in the path of destruction means the affected homeowners may soon start to rebuild. Those lucky enough to have home insurance, will likely file claims to recoup some of their losses. But do they really know how to do it?

Realtor’s Matt Christensen says knowing how to file a home insurance claim before you actually need to can save you a lot of time and hassle when an emergency hits. “Homeowners insurance can help you cover the costs of repairs, providing some much-needed financial relief. But before you file that claim, you’ll want to know the process (and the consequences) so you can plan accordingly.”

When disaster strikes your home, navigating the insurance claims process can be daunting. Insurance coverage typically kicks in for damages exceeding your policy's deductible. Consumer analyst Penny Gusner explains this concept: "If your deductible is $2,000, and the damage is going to cost $50,000 to repair, you'll pay the $2,000 and you'll receive the remaining $48,000." It's important to note that you can't file your claim until you've paid your deductible.

However, filing a claim isn't always the best course of action, even when damages surpass your deductible, says Christensen. Multiple claims can make you appear risky to insurers, potentially leading to increased rates or even policy cancellation upon renewal. Gusner cautions, "Depending on how large the claim is and how many you've had, your insurer may 'nonrenew' you for the next period." If you've been judicious about filing claims in the past, drastic changes to your policy are less likely, but it's still a factor to consider.

As a general rule, Gusner advises, "If you can afford the cost of repairs, it's best to pay out of pocket. I would advise paying out of pocket for anything up to $1,000 over your deductible." This approach can help maintain your insurance standing and potentially save you money in the long run.

When faced with an emergency situation, your priority should be preventing further damage. "If a window is broken, and rain is pouring in the house, cover it up," Gusner suggests. However, it's crucial to document the damage before you start cleaning up or making repairs. Take photos or videos as evidence, then contact your insurer as soon as possible to start the claims process.

A key component of filing a claim is submitting a proof of loss form. This is a sworn statement detailing your loss or damages. Gusner elaborates, "Typically, it includes pertinent information like where and when the loss took place and the amount you are claiming." This form, along with supporting documents such as receipts or estimates, is essential for efficient claim processing.

Christensen points out that the timeline for claim approval and payout can vary depending on your location. State laws differ, but generally, insurers must approve or deny a claim within 10 to 60 days. Some states stipulate a shorter time frame of 10 to 15 days, while others allow up to 60 days or simply require the insurer to respond "within a reasonable time." Once a claim is approved and an amount agreed upon, payment is typically due within 30 to 45 days. In total, you might expect about 60 days from filing to payout, though this can vary based on the complexity of the claim and other factors.

To expedite the claims process, organization is key. Gusner advises, "Have a list of everything you want to show the claims adjuster. Get detailed estimates from contractors, especially if you're making a claim after something disastrous, during a time when a lot of other people will likely be filing claims." Keeping thorough records, including photos, receipts, and correspondence with your insurer, can significantly smooth the process.

It's also worth considering filing your claim in person if possible. This can sometimes help speed up the process and ensure all necessary information is collected accurately.

Christensen adds that while it's important to act quickly in the event of damage to your home, it's equally important to approach the claims process thoughtfully. Consider the long-term implications of filing a claim, weigh the costs and benefits, and when in doubt, consult with your insurance agent about how a potential claim might affect your policy.

Realtor, TBWS

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