Guide to Filing Homeowners Insurance Claims…

Like most insurance types, homeowners insurance operates as an abstract promise. If anything were to go wrong with your home — and if that hypothetical wrong fell within the policy’s coverage — you’d be relieved of the cost burden. You make a claim; your insurance company forks up.

While most of us choose our insurance based on out-of-pocket costs, it’s the into-pocket costs you’ll be thinking about during a claims process. The best homeowners insurance companies make the process smooth and timely, but most importantly, they pay out fairly on your claim. While you can check on general consumer satisfaction with top providers, the claims process isn’t something that you can test yourself until it’s go-time.

That said, the ball isn’t entirely in the insurance company’s court. Here are some best practices to help you come out ahead in the claims filing process.

Before Filing a Home Insurance Claim

Don’t under-insure

Unless you’ve purchased a special endorsement, your coverage limits don’t automatically adjust to keep up with your home’s rising market value. Limits also don’t reflect the renovation you’ve done since you originally purchased your home. Every few years, you should request a customized estimate of your home’s value and insure accordingly. If your insurance limits don’t reflect the true value of your home, you may have to settle for subpar replacements.

Take a home inventory

A home inventory is an itemized list of all the personal possessions in your home (clothes, electronics, furniture), along with their distinguishing details and purchase price. Taking the time to draft one up before your belongings have been lost or damaged can save you a lot of time and confusion in the claims process. You won’t have to search your memory for what you had and what it’s worth — all of that will already be tidily stored away. If sifting through every cabinet feels like too much work, consider just cataloguing the big-ticket items, like your entertainment system, treadmill, and tech gadgets.

Keep up with safety measures and maintenance

There are lots of easy steps you can take to make your home safer and better functioning. Not only can they potentially save you from the heartache (and headache) of making a claim in the first place, they can secure discounts from your insurance provider. Smoke detectors, sprinklers, and even a simple deadbolt all look good to underwriters. Regularly cleaning your oven, dryer vent, and chimney, for example, is doing your due diligence to avoid household perils. And, in the event of catastrophe, proving you did in fact have an unobstructed chimney and working smoke detectors will ensure that your claim isn’t rejected on a technicality.

When It’s Time to File a Claim

Contact your insurance agent right away

The particulars vary from company to company, but there’s a time limit on when you can file a claim — usually around 30 days, but sometimes up to 60. It’s best to get on the phone with your agent as soon as you know that the loss merits filing a claim.

Keep on top of the claims process

Accurately and promptly fill out all claims paperwork and furnish evidence of your losses. Take photographs and annotate them with date of purchase, amount spent, and replacement cost, and track down original receipts whenever possible. If you already have an up-to-date home inventory, this part will be pretty painless.

Documentation shouldn’t only focus on the past. Ensure that you have a paper trail of communication with your insurance agent, their appraiser, and a public adjuster if you hire one. Keep a log of all communications with date and time recorded, and reiterate what was said over the phone in follow-up emails. The more information that is conveyed via written word rather than voice, the better. You never know when you might be working with new company reps or needing to prove that someone told you differently.

Pursue the payout

The payout amount your insurance company offers isn’t the amount you have to accept. Because the claims process can be drawn-out and the after-effects can include a hike in insurance rates, you should be getting as much value out of your claim as possible. If you’ve researched the needed repairs and reached out for bids and the total exceeds the amount the insurance company wants to settle for, bring it back to the drawing board. The higher the claims amount, the more likely there is to be a disagreement between the insurance company and the policy holders. The payout threshold when claims get dicey? $20,000.

If you’re in a high-stakes claim disagreement, consider hiring a public adjuster. A public adjuster is an independent party who works for you, not the insurance company. You can find a well-reviewed and accredited adjustor through the National Association of Public Insurance Adjusters. While you should expect to pay a substantial amount for their assistance (a flat fee or a percentage of your ultimate payout — around 10%), you can also expect a better payout.

Keep an eye out for insurance scams

In the wake of natural disasters, scammers frequently prowl. If you are approached by someone who offers to perform all needed repairs on your home in exchange for your anticipated insurance reimbursement, think twice before signing any papers. In assignment-of-benefit scams, individuals posing as contractors skip town after accessing your payout. It’s also wise to verify the identity of anyone who claims to be an appraiser sent by your insurance company or by a relief service like FEMA. You don’t want to release private information like Social Security numbers until you’re sure of who you’re talking to.

Homeowners Insurance Claims FAQ

What happens if your claim is denied?

There are a few common reasons why your home insurance claim might be denied.

  • Negligence. The insurance company may find that the claim could have been avoided altogether if you had seen to routine maintenance, like repairing a worn-out roof or cleaning your oven.
  • Not covered peril. Flood insurance, for example, is a point of coverage a lot of people think they have but don’t. Ideally, you should know before filing a claim whether it’s a peril covered by your policy. It’s better to know before you file because home insurance claims are recorded in a database accessible by all insurance companies. Because too many claims is a red flag for insurers, you don’t want to add to the claims list under your name unless you’re sure you’re going to be reimbursed.
  • Too much time lapsed before filing a claim. There’s a statute of limitations when it comes to filing an insurance claim. The time limit varies between companies but you don’t want to risk it; get claims in stat.

If you believe that your insurance company has wrongfully denied your claim, arm yourself with greater evidence and hire an independent appraiser. Then, resubmit your claim with more information.

Will a claim increase my premium?

If this is your first homeowners insurance claim, you might be in the clear. But a second claim within a 10-year time span (and sometimes even a first claim) can raise your premiums by between 10% and 20%.

Can you keep homeowners insurance money?

If you don’t use the entirety of your homeowners insurance claim check on repairs, the balance is yours to keep. So long as yours is the only name on the check, the money is free for you to use at your discretion.

Are claims payouts taxable?

Broadly speaking, insurance lines for which you pay the premium aren’t taxable. Claims payouts from either home or auto insurance don’t need to be reported as income; they are simply reimbursements for expenses.

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