Whether your home's been damaged due to a theft, fire, pipe burst, storm, or other calamity, the question will soon arise, "Should I file an insurance claim?" Filing insurance claims is a painstaking process that requires loads of paperwork, documentation, visits with insurance adjusters, deductibles, estimates, and more. Yes, it is an insurance maze. When should you file a claim? When shouldn't you file a claim? How do you know when the hassle of filing insurance papers is worth it?
Get to Know Your Policy
Before making a decision, it's important to understand your insurance policy. What's covered? What's excluded? How much is the deductible? For example, if your home was burglarized and the only thing that was stolen was your $10,000 mink coat, you need to make sure that your policy covers this loss. In the case of high value items like jewelry, art collections, and furs, most insurance policies have low limits. Unless you've purchased an endorsement covering the fur coat, it is likely subject to the policy's lower limit.
Water damage is a tricky issue for those who must file insurance claims. Examine your policy to find out what types of water damage are covered and what types are specifically excluded. While you may feel silly for having left the kitchen faucet running, the water damage may in fact be covered. On the other hand, water damage from a hurricane may not be covered at all depending on the circumstances.
Understand Your Insurance Deductible
Whenever you file an insurance claim, you are responsible for paying the insurance deductible before the insurance kicks in. Many homeowners choose higher deductibles in exchange for lower annual premiums. In addition, some types of damages have different deductible amounts. For example, in some states, hurricane deductibles are significantly higher than deductibles for standard insurance claims. Find out what your deductible is for the damage in question and compare that to the estimated repairs. For example, if you have a $500 deductible and the water damage repair bill is $450, filing a claim isn't necessary as the total damage is under your deductible amount.
Determine Whether Your Rates will Increase
While a single small claim isn't likely to cause a rate increase, it's always a consideration. Certain types of claims raise red flags with insurance companies including dog bites, water damage, and slip and fall injuries. However, these same claim types often have high expenses involved. For example, if your dog bites someone, you may be sued for damages in excess of the medical bills. The decision to file an insurance claim or not is a personal one. You will need to weigh the advantages and disadvantages carefully. If you think you'll be sued as a result of a dog bite, you may want the insurance company involved even if your rates may increase in the future. On the other hand, if the bite wasn't serious and the other party is amenable to your paying their medical bills directly, you may want to avoid a claim.
Navigating the insurance maze is confusing and all claims and their circumstances lead to different possible routes. Your best bet is to learn what protections your policy provides you with and at what ultimate cost. While you're learning about your homeowners policy, spend some time at your state's department of insurance Web site. Here, you'll find a wealth of information for consumers.
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