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What is a Homeowners Insurance Claim?

A homeowners insurance claim is how you can get reimbursed for covered losses in your home or on your property. After a loss happens, you can start the claims filing process in multiple ways, either over the phone through your online account or through many carriers’ mobile apps. The process can differ by insurance company, so familiarize yourself with your insurer’s process options after getting your policy.

Filing a homeowners insurance claim under the right circumstances may help you better manage a significant loss.

When to file a home insurance claim

Damage occurring to your property does not automatically mean that you should file a claim against your homeowners insurance policy. You should consider factors to determine if filing a claim is the best course for you in the long run.

The estimate is more than your deductible

If the cost to repair damage to your home or the replacement cost of a damaged household item is only slightly higher than your policy deductible, you may want to consider paying these costs yourself. Every time a claim is filed, it is reported to the Comprehensive Loss Underwriting Exchange (CLUE), a national database insurers use to track claim activity. All carriers review this database, and a claim may increase your premiums at your next policy renewal. Having repeat claims, even ones with low insurance payouts, might cause a property insurer to nonrenew your policy. Frequent or repeat claims over time may make you only eligible for high-risk homeowners insurance, which is more expensive.

The damage is covered and extensive

Homeowners insurance is not intended to cover everyday maintenance or minor repair costs. It is designed to cover significant and unexpected, sometimes catastrophic, losses. These are the events that should generate a claim. For example, hurricane wind damage or a fire in your home often result in extensive damage and will typically be the right catalyst for filing a claim.

You have an endorsement for the damage

An endorsement is add-on coverage, providing financial protection for something a standard home insurance policy does not normally cover. Endorsements can even extend coverage limits above what a standard policy offers. These “add-ons” increase your premium, sometimes only slightly, and may even come with a separate deductible.

Jewelry coverage and sewer backup are just two endorsements commonly added to homeowners policies. When the damage incurred is covered by an endorsement, it might make sense to file a claim because these are typically costly repairs.

When not to file a home insurance claim

As alluded to above, there are a number of situations where filing a homeowners insurance claim might not be in your best interest. In these situations, paying the cost to repair damage or replace items yourself when possible can save on premiums and prevent more serious problems with future coverage.

The damage is minimal

Any claim, even a very minor one, may lead to an increase in your home insurance premium. Your insurer will likely deny any repair or replacement costs below your deductible. Claims that have repair costs only slightly higher than your deductible should probably be avoided as your insurer won’t cover much of the claim, and you risk a premium increase.

Your policy excludes the damage

You don’t want to walk right into a problem by filing a claim that you are fairly certain will be denied. Even claims that are denied or have $0 paid out are reported to CLUE and therefore may have a negative impact on the premiums you will pay in the future.

Filing a homeowners insurance claim is not a “nothing to lose” proposition. Do your research on your policy exclusions, and where possible, consider getting the advice of an insurance agent before you file a questionable claim.

The damage is from normal wear and tear

Homeowner insurance policies consistently include “failure to maintain” exclusions which give the carrier the right to deny the claim based upon negligence or lack of maintenance. For example, if you have a seriously damaged and leaking roof that resulted from your failure to replace shingles that led to the bigger problem, your carrier will likely deny your claim.

You have several recent claims

Filing a series of claims within a relatively short time frame can significantly raise eyebrows with underwriters and lead to higher insurance rates or a policy non-renewal. A homeowner with multiple claims on their record can cause carriers to assume that another claim will likely be filed. This is part of the risk assessment carriers use to determine if a policy should be renewed and whether the rate should change. Even denied claims can be considered a negative factor when insurers determine you have an excessive level of claim activity.