But just because something goes wrong doesn’t always mean you should file a claim.
The claim process can be complex and time-consuming, and it can also be expensive if you don’t know what should — and shouldn’t — be claimed.
Here are six tips for considering when (and when not) to file a home insurance claim.
Should you file a home insurance claim?
1. Does the damage exceed the deductible?
If the answer to this question is “no,” then you should not file a claim.
For instance, if your deductible is $1,000 and your home has only sustained $500 worth of damage, that damage isn’t going to be covered through the claim process. Any damage less than the deductible would be the responsibility of the homeowner.
Even if damage does exceed the deductible, it’s important to consider by how much. For example, if you have a $1,000 deductible and you put in a $1,200 claim, you’ll only get $200 and you also have a claim on your record, which could impact your premium. It probably makes more sense to just pay for those repairs out of pocket. Always think about the risk and reward of filing a claim before you decide.
2. Make sure you have coverage for the type of claim you’re thinking about filing.
If you don’t have flood insurance, for instance, filing a claim for water that ended up in your basement after a hard rain is a bad idea. If you file a claim for something that isn’t covered, it’s still going to show as a claim on your history for the next three years, even though your insurance company denied the claim because you didn’t have that coverage. Your agent should be able to help you determine what is covered and what isn’t, so make sure you call that agent before making a decision.
3. Make a calm, rational business decision.
When things happen to our homes and our belongings, it’s an emotional experience, but the decision on what to do next should be a business decision.
If it’s not overwhelmingly tragic, at least wait until the next morning before deciding to file a claim. Get some advice from friends and family, have a long conversation with your agent, and get an estimate from a contractor or two. Then do the math and make your decision if a claim makes sense.
4. You should probably file any claim involving personal liability.
Personal liability coverage is the part of a standard homeowner’s policy that protects you against lawsuits if another person is injured on your property (for instance, your dog bites a visiting friend). Personal liability claims are almost always worth filing.
You never know when any liability claim can explode into a financial and legal disaster, and the insurance company requires prompt notification if something happens on your property.
This doesn’t mean you need to file a claim if a visitor gets a paper cut or scrapes a knee. But if the injury is serious, you’ll want to make sure your insurance policy will cover a whole host of costs, including medical expenses, lost income or even permanent disability.
5. Consider the number of claims you’ve filed in the past
If you have an unusually high number of claims (usually more than one or two in a three-year period), you may be flagged as a high-risk homeowner, which could result in a higher premium or even having your coverage dropped completely.
Insurance companies use the number of claims you file as a shorthand way of evaluating how well you maintain your property and manage the risks of ownership. This is particularly true if you have numerous claims involving the same damages, such as wind damage, flooding or tree damage. Several of the same types of claims can be a red flag.
6. Don’t submit claims for known maintenance issues.
For instance, the fence in your backyard may be old, and you know a windstorm is eventually going to blow it down. It’s better to budget for replacing the fence on your own than it is to submit a claim after the damage occurs.
Homes are full of maintenance expenses, and insurance companies try to weed out clients that use their policies like maintenance contracts. Also, well-maintained properties should get the best insurance pricing. So save your maintenance records and let your agent or broker know when you do work to your property. It may help you get discounts.