TO File A Claim Or Not To File A Claim, That Is The Question

There are many types of coverage offered on a typical homeowner’s policy, but when is it a good idea to file a claim vs. footing the bill yourself for any damage?  Many carriers offer loss free credits, or provide a better pricing tier for those with no claims history.  Most importantly, claim frequency and claim payout amounts are often used to help determine whether or not an insurance carrier will renew the policy in the coming year. A homeowner who is constantly filing claims is more likely to be nonrenewed than a homeowner with one claim in a three-year span.

With that said, this is not to say you cannot file a smaller claim. If the coverage is there, the insurance carrier will cover that loss. What is considered affordable is going to be different for each person depending upon their situation at the time of the loss. Also, if you file one claim for $1,000 it does not mean that you will be nonrenewed. The idea of this blog is to help you understand how claims can affect you and how to best navigate this process.

I know that this rubs people the wrong way and understandably so. Many people feel that since they pay their premiums year after year and get nothing in return, when something does occur at their home then it is only right that they file a claim and recoup their loss from the carrier. While I do sympathize with people regarding this issue, insurance carriers do not see it this way. The insurance industry views insurance as a means to cover certain events that are just too costly to pay for out-of-pocket without notice.

My suggestion is to contact your insurance agent or carrier to discuss the situation before filing a claim. You want to be sure that there are no coverage issues or limitations surrounding the loss that may leave you on the hook for the majority of the damage.  Once you discuss this with your agent, assess the damage and get an estimate for repairs so that you have an understanding of the cost involved, You may find that some losses are much less expensive than you would think (and vice versa).

For instance, fallen trees are a common occurrence during storm season. Tree removal can be a costly affair, especially if you have several trees that have fallen on your property. Most carriers have certain stipulations regarding when tree removal is covered and how much they will pay out. Some carriers require that the tree or trees land on a covered structure or block a driveway, while others may cover any tree that falls on the property. Most carriers also cap the amount that they will pay for any loss at $500, regardless of the total cost or number of trees fallen.  If you have a $1,000 deductible on your home policy and have three trees fall with a $1,200 bill from the tree removal company, you may end up with a claim check for $200. You will pay the remaining $1,000 out-of-pocket to cover your deductible.

So before you file a small claim, it is best to discuss the situation with your carrier or agent before putting in the claim so that you have a better understanding of your coverage and how it applies to a given loss.  Have you seen this type of issue arise in a claim you filed?  If so tell us in the comments section below.