Homeowners insurance is incredibly valuable when your house suffers major damage, but there are times when filing a claim may not be in your best interest. Ideally, homeowners should receive coverage for any damage without fearing the consequences, but unfortunately, excessive claims may lead to the insurance agency dropping their coverage or raising their rates. The following is a complete overview of when you should and should not file a homeowners insurance claim.
How Homeowners Insurance Works
The way homeowners insurances works is quite simple actually. Homeowners pay a specified amount either monthly or annually, and in return, they receive financial compensation to repair damage to their home. If your home is damaged – which may be the result of heavy wind, water damage, etc. – then you file a claim with your insurance agency, who then assesses the extent of the damage and covers the cost of the repairs.
However, like any business, homeowners insurance is concerned with generating profit. Subsequently, homeowners with expensive or excessive claims are at risk at increased payments or being dropped by the insurance agency.
When to File a Claim
Although there are often some restrictions, most homeowners insurances companies allow clients to file a claim whenever they want, which may vary from a small leak in the roof to severe hurricane damage. The most obvious time to submit an insurance claim is when the damage is not your fault and the cost of the repair is significantly higher than the premium. Also, one claim is not going to hurt your status with an insurance company, so you may be able to make a claim for smaller repairs if you have not made a claim in ten years or more.
When not to File a Claim
The first instinct when damage occurs to your home is to call the insurance first. However, it is often best to assess the damage, learn more about your coverage and make an informed decision whether or not you should request assistance. In many instances, the cost to repair the damage is less than the deductible, in which case paying for the repair yourself is your best bet. It might also be best to repair damage if it is your fault, such as a broken window while playing catch with your son or daughter. Also, keep in mind too many claims may cause insurance agencies to drop or raise the price of your coverage, and it might be difficult to find another company at an affordable rate.
The Bottom Line
It is important to know your insurance policy and fully understand what is covered and what is not, along with the cost of the deductible, whether the damage is your fault or was unavoidable and your number of claims over the past ten years. While a single claim, regardless of the size of the claim, is not typically a cause for concern, multiple large claims can be detrimental to your long-term cost of homeowners insurance.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129