Homeowners Insurance when should you File a Property Damage Claim

Your insurance company does not expect you to know all of your coverage all of the time. That is why they employ professional adjusters to review coverage, make a determination, and then explain the coverage to the insured. For this reason, you should not necessarily consider coverage when making a claim, the insurance company will do that for you. What you should consider instead is the amount of the claim relative to your deductible and also the total number of claims you have submitted under your policy.

If you have damage that will cost $650 to repair, and you have a $1000 deductible, don’t bother submitting the claim. If your deductible is $250, you may or may not want to consider submitting the claim. Be aware that insurance companies do look at the number of claims an insured submits, and they do consider that in determining premiums and whether or not to continue to do business with that insured.

If you have one claim in 10 years that costs the insurance company $10,000, you will probably remain in good standing with them as long as you pay your premiums. However, if you submit a claim every year for 10 years, and the insurance company pays $10,000 in total for those 10 claims, they will probably view you more as a risky customer that likes to find ways to make their insurance company pay and you may find a cancellation notice in your mail before year 11.

Knowing that your insurance company does look at the number of claims you submit, you might want to consider looking at coverage yourself before you submit the claim. Here are some basics on home-owner’s policies that may help you interpret yours.

A homeowners insurance policy will cover the house, its contents, and it most often also provides coverage for any other buildings on the property like a shed or a detached garage. So the first question to ask is whether or not one or more of those three things sustained damage. If they did, the next thing you need to do is to determine whether or not the damage is covered. The final determination on coverage will be made by your insurance company, but you should have a basic understanding of what is covered under your policy and what is not.

There are two styles of insurance policies available to homeowners. One is often referred to as a “named peril” policy form. This usually costs less than the alternative, which can be described as a form that covers losses that are not “excluded”. The two examples of these forms that are the most common are the HO-2 and the HO-3 forms.

A “named peril” form begins with a list of the causes of loss that are covered. You will see that the form usually says in the beginning that “the following are covered causes of loss” or something similar. This list usually includes fire and explosion, wind, vandalism, and several others. The trick with this type of policy is that if the loss cannot be described by one of those perils, it won’t be covered. If you have some damage, and you have a “named peril” form, look through the list and see if the damage falls under any of those listed causes. If so, call your agent and report the claim.

The next type of form will usually state that it covers direct physical loss to covered property. It will then provide a list of exclusions for types of damage that are not covered.

In summary, the first type of policy only covers specific types of damage, while the second type of policy covers all types of damage, unless it is excluded. Confused yet? If so, leave it up to the pros. Claims adjusters know the policies well, and will be able to cite specific policy language that relates to your claim. If something is not covered, they should issue a written denial that quotes the sections of the policy that apply to your claim. If you receive a denial letter that does not convince you that your claim is not covered, then call the adjuster to to explain things first. If he or she cannot explain themselves to your satisfaction, a call to the agent may help. Finally, if you feel that the denial was improper, you can inquire with the insurance department of your state. Most states will have an active insurance department that will pursue any complaints that you have which should provide good information to you to either support or refute a denial by your insurance company.

Keep in mind that you bought insurance to help you pay for damage to your property. Not everything is covered, but since you bought the coverage you should not hesitate to use it when you need it. Insurance companies are heavily regulated by the State they operate in, and just like any business, they prefer happy customers over angry ones. Keep this in mind when deciding whether or not to submit an insurance claim.