When You Should and Shouldn’t File a Home Insurance Claim

March 28, 2018

You pay for homeowner’s insurance every year, so you figure if something is wrong, you should file a claim. In some cases, yes, this is a good choice. Other times, though, it may not be the best choice you can make. There are times that you should and times that you shouldn’t make a home insurance claim.

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The Times to File a Home Insurance Claim

First, we will look at the times when you should consider a home insurance claim. Know beforehand though, that your premium may increase as a result of each claim. Keep that in mind as you make your decision.

The Damages Exceed Your Deductible

If the cost of the damages exceeds your deductible, you may want to consider filing a claim. First, though, consider how much it exceeds your deductible.

Your deductible matters because you want to make sure it’s worth filing that claim. Again, your premium may increase as a result of the claim. If not, you still have a ‘mark’ against your record. When you shop around for insurance (as you should), you may not get the best rates available because of the claim even if it did not exceed your deductible.

Set a threshold for yourself. For example, if you can afford $1,000 on top of your deductible, make that your threshold. If the damages exceed that amount, go ahead and make a home insurance claim. You’ll pay your deductible and if the damages are covered, your insurance company will cover the rest.

The Damages Involve Personal Liability

Any serious injuries that occur on your property should immediately prompt a call to your insurance company. Again, we said serious – a small scrape or minor injury probably doesn’t need to be reported. But, something catastrophic could leave you in financial ruin. Letting your insurance company know what happened and filing a claim right away can help protect you.

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Even if the injury occurred to someone that you are very close with (even a relative), you never know when they may come after you for the charges. People do strange things when they are hurt and/or feeling emotional. Letting your insurance company handle the claim may keep you out of court and out of financial ruin.

It’s Your First Claim

If you have never claimed any damages to your home or you have not done so in the last 10 years, it’s safe to say you can file a claim. Of course, you should only file if it exceeds your deductible, as we discussed above.

If it’s something minor and you can handle it yourself, go ahead. But, if it’s slightly costly or you have any doubt in your mind that any personal liability can arise as a result of the damages, file a claim. One claim in a long period will not affect your premiums nearly as much as it would if you had multiple claims.

The Times Not to File a Home Insurance Claim

Just as there are times you should file a home insurance claim, there are just as many times that you should avoid filing a claim.

The Damages Do Not Exceed Your Deductible

If the damages do not exceed your deductible, there is no reason to file a claim. In fact, if you do, you are only shooting yourself in the foot. The insurance company will not cover the claim because you would owe the full amount until you reach your deductible. However, they would keep record of the claim, counting it against you when it’s time for renewal or when you decide to shop around.

You have to decide what size deductible you are comfortable accepting. The higher the deductible that you choose on your policy the lower the premium that you pay. But, keep in mind when disaster strikes, you’ll owe the full amount of that deductible before insurance kicks in, so make your decision wisely.

The Damages Only Exceed Your Deductible Slightly

You have another decision to make if the cost of the damages only exceeds the deductible by a small amount. If you can afford the cost, you may want to avoid making a claim on your insurance. If it’s not your first claim, your premiums could increase significantly. The amount of the increase may cost you more over a short period than it would be to pay for the damages yourself.

Only you know what you can afford. It’s safe to say, though, if the damages only cost a few hundred dollars over your deductible, it’s not worth it. The increase in your premiums will greatly outweigh the cost of paying for the damages.

You Have Multiple Claims in a Short Period

Just how many claims are too many? The general consensus is two claims in 3 years is a red flag for insurers. Will they automatically cancel your policy? Probably not, but you might pay higher premiums. It depends on the type of claim and even the amount.

You want to remain low on the insurance company’s radar though. The higher risk you pose, the more they will charge you. In fact, you even run the risk of your policy being canceled if the insurance company thinks you file too many claims.

It’s a fine line you must walk when deciding if you should file a home insurance claim. You pay for the insurance so you want to use it, but it could work against you if you aren’t careful. Really consider the importance of filing the claim. If it’s not excessively outside of your budget and does not include personal liability, you may want to refrain from filing.

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