Should I file a homeowners insurance claim?

A homeowners insurance claim could cost you more than just your deductible.

So you came home from work to find your floor covered in water.  What now? Your first thought may be to call the insurance company to get someone to come out to look at the damage, but knowing when to make a homeowners insurance claim and when to fix the damage yourself could save you money—right now and in the coming years.

Here’s what you should do to make sure you choose the repair option that will save you the most money upfront and ensure that your insurance rates don’t skyrocket in the future.

Ask a professional first.

Without knowing the extent of the damage, it’s hard to estimate how much the repairs will cost to determine whether or not you should file a claim and pay the deductible or pay out of pocket.

It’s a good idea to find a reputable restoration company to come to your home and take a look at the damage. They will be able to tell you how much damage is done, what it will cost to fix it, and may even be able to give you advice on whether or not to make an insurance claim. Slate Restoration, a company based here in Arizona, will educate you about your options so you will know whether or not the problem is something you can fix yourself, pay them to fix for less than your deductible, or if you really do need to make an insurance claim.

Determine the cause of the damage.

Is your roof leaking because you should have had some shingles replaced a while back? Did a water pipe burst due to negligence on your part? Don’t attempt to claim any type of damage that was caused due to a lack of routine maintenance because even if your claim is denied, your insurance rates may go up.

Know what types of damage are excluded from your policy. For example, many policies don’t cover termite damage, sewer backups, and mold.

Know your deductible.

Sometimes home insurance deductibles work a little differently than auto insurance deductibles. Depending on your policy, you might have a typical flat-rate deductible (like you do for your car insurance) or you might have a percentage-based deductible that’s based on the insured value of your home. There’s also a split deductible, which works like a flat rate deductible for most claims, but changes to a percentage-based deductible for particular scenarios laid out in your policy.

Home insurance deductibles vary greatly. Like $500-$25,000 greatly. It may seem like a no-brainer that you should pay your deductible if your damages are going to exceed that number. However, there are other things to keep in mind when making this decision, like how much your insurance premiums will go up if you do make the claim.

A $1000 claim now could mean higher insurance premiums for years to come. A report released by InsuranceQuotes.com found that, on average, a single claim will raise your monthly premium by 9% and a second claim could raise them 20%.

Some insurance companies will even drop you if you make too many claims. After that happens, it might be hard to find another company to insure you thanks to CLUE (the Comprehensive Loss Underwriting Exchange). It’s a database that tracks your auto and property insurance claims going back seven years. It’s available to all insurers and they use this information to determine whether or not they can cover you and how much to charge.

Pay out of pocket if you can.

Think about your homeowners insurance policy as a backup in case your home sustains catastrophic damage, like in a fire. If the repairs are going to cost you $3000 and your deductible is $1000, it may seem like the right idea to make the claim and pay the deductible. But if you are able, you should really try to pay for the repairs out of pocket. That’s why it’s so important to have an emergency fund set up.  Some repair companies will also let you make payments if you aren’t able to pay for the repairs upfront.

It may be frustrating that it isn’t advisable to file a homeowners insurance claim every time your home sustains damage, but just remember that your homeowners insurance is there for you if major damage happens in the future. And the money you pay each month for that peace of mind is totally worth it.

And if you think you are paying too much for your policy, let Gebhardt Insurance Group shop around for you. It’s our job to find you the best value for your homeowners insurance policy. Give us a call at (520) 836-3244 or get a free quote right now.

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Steve Gebhardt

Gebhardt Insurance Group was honored by AAA Insurance for being the top New Policy Agency in Arizona for 2013 and achieving the "Emerald Achievement Award."

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