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Should you file an insurance claim on your home - Growella

Should I File An Insurance Claim For This?

By Dan Green

Insurance pays cash when your home’s been damaged. Don’t file a claim every time something goes wrong, though. Learn when it’s best to file an insurance claim, and when to let it go. Knowing the difference will save you money for the next 10 years.

What Is Homeowners Insurance?

As a homeowner with a mortgage, you’re required by law to insure your home against damage and loss.

Insurance for your home is known as homeowners insurance . It’s also known as hazard insurance.

Homeowners insurance pays for repairs to your home when it’s damaged; and for a complete rebuilding of your home if it’s ever destroyed by fire or weather, as examples.

Homeowners insurance is billed once per year, and typically paid in 12 equal monthly installments. Your annual costs for homeowners insurance is based on the amount of insurance you want for your home, the size of your insurance deductible , and where your home is located physically.

Your homeowner insurance is also affected by whether you live close to a fire station or police station; whether you have a home security system installed in your house; and, whether you’re using fire and water sensors to help protect your house.

When you shop for homeowners insurance, shop around because prices can vary among insurance companies. Some charge a lot for homeowners insurance, and some companies only charge a little.

Why You Need Personal Liability Coverage, Too

Homeowners insurance pays cash when there’s damage to your home. However, that’s not the only type of damage which can occur in your home.

House guests and other people can fall in your home, get hurt, and need medical attention. When this happens, you’re at risk for a lawsuit and large damages.

This is why, in addition to homeowners insurance, homeowners should carry a Personal Umbrella insurance policy .

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Personal Umbrella insurance goes by multiple names, depending on your insurance company:

Personal Umbrella insurance protects against lawsuits and can help you stay solvent should a house guest fall down stairs; or, trip on a rug. And, because it’s cheap, everyone should have at least a small policy in place.

Personal Umbrella insurance protects the money you have today, and the money you’ll earn tomorrow. Don’t skip it.

When Should I File An Insurance Claim?

An insurance claim is an official request you make to an insurance company, asking to get paid for damages.

Insurance claims can be made for any reason that’s a part of your insurance policy.

When you have homeowners insurance, you can make an insurance claim after a fire in your home; after there’s been theft or vandalism; and, after damage from falling objects or broken pipes and appliances.

There is a long list of circumstances for which you can file an insurance claim.

Collectively, these circumstances are known as covered perils , and the list of covered perils is different between insurance companies.

This is why it’s important to get multiple quotes when you shop for homeowners insurance. The more protection your insurance policy provides, the better off you’ll be as a homeowner.

But, just because something’s gone wrong, that doesn’t mean you should automatically file an insurance claim. Filing claims can cause your insurance rates to rise. So, there are times when filing a claim makes sense, and other times when it’s foolish.

Here’s when you should file an insurance claim.

1. Your home has sustained at least $2,000 worth of damage

When something goes wrong in your home, the cost of making repairs can get big. It’s expensive to fix floors, repaint walls, and replace jewels, as examples.

When you file an insurance claim for damages like these, the insurer won’t send all the cash you’ve requested. They send all the money, minus some amount of cash which is known as your deductible .

A deductible is the money that an insurance company withholds from a customer’s insurance claim. Deductibles can be any size, and are most often $250, $500, or $1,000.

The higher your deductible, the cheaper your insurance policy will be.

When there’s damage to your home, consider the size of your deductible and whether it’s worth it to file a claim. If the cost to repair is only slightly above the size of your deductible, it won’t make sense to file a claim.

However, if the cost to repair is high, file the claim as soon as you can.

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2. Somebody Got Hurt In Your Home, Or On Your Property

Your Personal Umbrella insurance policy is meant to protect you from other people getting hurt in your home, or on your property.

The injury could be from a fall down the stairs, a bite from a dog, or anything else.

When somebody gets hurt on your property, your Personal Umbrella policy is what pays for their medical bills; your lawyers’ fees; and, any damages awarded by the court.

It’s important to file Personal Umbrella insurance claims quickly. Your insurer will want to know if you’re at risk of being sued and you risk losing your protection when you wait too long to file.

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3. It’s been more than five years since you’ve filed a claim

Insurance is protection for when things go wrong.

When a water pipe bursts and floods your home, insurance will send cash to fix what broke. When your home is burgled and jewelry is stolen, insurance will send cash to replace what was lost.

These are events that insurance companies expect. However, if they happen too often, you run the risk of getting cut off.

Insurance companies know you’ll make about two claims every 10 years. They expect it, and it’s figured into your homeowners insurance policy. What they don’t expect is to get three claims in 18 months.

So, if it’s been about five years since you made an insurance claim, or if you’ve never filed a claim before, go ahead and file it. It’s unlikely your claim will be turned down and your insurer will be happy to help.

When Should I Not File An Insurance Claim?

The reason you get insurance is to get money after something goes wrong in your life. And, as a homeowner, the list of things that can go wrong is long.

However, just because you have homeowners insurance, that doesn’t mean you should always use it. There are times when it’s better to avoid making an insurance claim and to pay for damages on your own.

Here are some of the times you shouldn’t make an insurance claim on your homeowners insurance policy.

1. The cost of your repairs is less than $1,000

It can be expensive to repair damages to your home. Roofing isn’t cheap, and neither is flooring or dry wall repair. But, just because your home has sustained damages, that doesn’t mean you should file an insurance claim.

This is because insurance companies sometimes raise the cost of a homeowners insurance policy if a customer makes a particular type of claim.

For damages less than $1,000, then, it can be a better idea to pay for your home’s repairs out-of-pocket — especially if your deductible is five hundred dollars or more.

Using your emergency funds and savings for home repairs can be painful. Long-term, though, it’s usually cheaper than paying a higher rate to be insured.

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2. The damage is because didn’t do basic maintenance

Insurance companies pay cash to people whose homes have sustained damage. However, there are certain circumstances for which a Covered Peril covered peril will be ignored.

Most notably, if you fail to take care of your things, and then your things break, your insurance claim won’t be honored.

This is why homeowners should have a routine maintenance policy for their water heater; their heating and cooling system; their roof; and anything else that’s mechanical. Damage because of neglect is almost never covered by a homeowner insurance policy.

By the way, it’s never too late to begin a routine home maintenance program.

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3. The damage isn’t covered in your policy

Another time you shouldn’t file an insurance claim for your home is when your home is damaged, and the damage isn’t covered by your current insurance.

The most common example is damage from flooding.

A standard homeowners insurance policy doesn’t pay for damages caused by flooding, sewage backup, and weather-related damage, such as from hurricanes or persistent rainfall. For that, you’d need flood insurance.

Nor will a standard homeowners insurance policy pay for wind damage from a tornado or heavy storm. That’s what wind damage insurance is for.

And, you don’t want to file a claim if your damage is uninsured. This is because your “claim” will count against you — even if you don’t have coverage — and that can raise your rates.

When your home is damaged from floods, wind, water, or some other natural disaster, then, review your policy before submitting a claim. If you lack the specific coverage, don’t go filing a claim.

Get Better Coverage With Better Rates

Homeowners insurance companies give different levels of protection depending on where and how you live. Don’t settle for your first insurance quote. Shop around and see what you can save.

Check rates with three homeowners insurance companies, at least — especially if you’re bundling Personal Umbrella insurance and auto insurance. Your rate could be reduced 10% or more.

Click here to get an insurance quote.

Written by Dan Green

Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.

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