A few years ago, Robert Farrington’s home suffered water and wind damage from a storm.
His home in San Diego, California, took a blow from water damage. On the outside, there was water damage on the wall stucco. On the inside, water damage affected the drywall and paint.
What’s more, his roof was leaking, and the storm also blew off a shade cloth from his patio. As it was a custom, one-of-a-kind shade cloth, it would cost thousands to replace.
To cover the damages, Farrington filed a home insurance claim. Despite a few minor hiccups, the process went pretty smoothly.
Farrington filed a claim online. His insurer sent out a rep, who checked out the damage, snapped a few photos, and recommended a few local contractors.
Farrington decided to go with one of the recommended contractors, who weatherproofed his four-bedroom, three-bathroom house.
Here’s the hiccup: while the repairs the contractors made were satisfactory, Farrington learned a valuable lesson. His homeowner’s insurance covered the damage — but not the root cause of the loss. In turn, he had to hire his roofer to replace any damaged tiles and re-paper a section.
“In the end, this was seen as maintenance,” says Farrington, who is the founder of The College Investor.
“So while our homeowners paid the claim for all the damage, we had to take care of the cause.”
When you’re a homeowner, you want to do all you can to make sure your home is in tip-top shape. Ideally, repairs from accidents and natural disasters should be tended to quickly.
So when should you file a claim versus pay out of pocket? And what are some best practices for filing a home insurance claim? Let’s dig in:
When should I file a claim?
You should file a home insurance claim when an accident, natural disaster, burglary, or act of vandalism causes damage or loss to your property.
While it largely depends on the policy, and the coverage amounts vary, homeowners insurance typically covers:
The structure itself
Homeowners insurance covers your physical home and any structures attached to it. For instance, heating, ventilation, and air conditioning systems (HVAC), electrical wiring, and plumbing.
Structures not attached to your house
Think standalone structures such as a cottage, guest house, fences, freestanding garages that are converted into a “she shed” or “man cave,” and tool sheds.
Pretty much anything that you own could be reimbursed if damaged or stolen: clothing, furniture, jewelry, electronics, and artwork.
What’s more, personal possessions that are, say, stowed in the trunk of your car might also be covered.
But keep in mind, the coverage limits you chose for your personal property might not be enough to cover your high-value items. And you can add on an insurance rider to your policy to cover your jewelry, specialty items, and collectibles.
If you — or your pet — are found responsible for someone getting injured while on your property, you will be covered.
Additional living expenses
Let’s say your house is uninhabitable or you don’t have access to your kitchen during repairs. If you have additional living expenses coverage, your policy might cover the cost of accommodations and meals.
It might also cover the cost to do laundry at a laundromat, or pet sitting fees, or renting furniture.
Your standard homeowner’s policy might cover medical bills for you, your family or others who suffer an injury on your property.
As mentioned, your policy will have certain limitations and rules. So you’ll want to comb over the details and fine print to know exactly what’s covered.
When should I pay out of pocket?
There are situations when you can’t file a claim or when it doesn’t make the most sense to.
When the damage isn’t covered under your policy
You should pay out of pocket when the damage or loss incurred isn’t covered in your homeowner’s insurance policy.
For instance, some natural disasters such as earthquakes aren’t included on a standard homeowner’s policy.
If you live in a coastal state, damage from hail and windstorms, and sometimes from floods, might not be covered.
What’s more, a standard home insurance policy doesn’t usually include damage from mold and sewer backups.
When you’ve filed other claims recently
If you have a history of filing multiple claims over a short period of time, this will up the price of your premium.
According to a 2014 study by Insurance Quotes, filing a single claim can increase the cost of your premium by 9 percent.
If it’s minimal damage to your home, it might be smarter not to file a claim on your homeowner’s insurance.
When the repair cost is less than your deductible
When else should you consider paying out of pocket for damage to your home? If the cost to repair the damage, replace your possessions, or cover living expenses is less than the deductible.
Deductibles for home insurance are either a set amount, such as $500 or $1,000. Or they are calculated based on a percentage of the insured value of your home.
If your home is insured for $200,000, and the deductible is 2 percent, then your deductible is $4,000.
Say a car ran into your fence and the cost to repair your fence is $300. If your deductible is $500 before any damages are covered, you might want to pay out of pocket instead of filing a claim.
How to file a home insurance claim
Decided to file a home insurance claim? Here are a handful of pointers:
Contact your insurance company as soon as you can
You’ll want to report damages and file a claim promptly. Before you submit, make sure all the info is accurate and up-to-date, and that the required documentation is included.
File a police report for stolen items
If your home was burglarized, call your local police immediately and file a report.
It’s a good idea to create a home inventory list as a preventative measure for your belongings.
When you make this list, it ensures that you don’t miss any items to claim. It can also serve as proof of loss due to a disaster. It definitely makes the claims process much smoother.
If you don’t have a home inventory list, jot down a list of what damages occurred on your property, or what was stolen or went missing.
Patch up existing damage
To prevent further damage, do what you can to temporarily fix the affected areas. Board up exposed walls, mop up wet floors from a water leak.
Schedule an appointment for an adjuster to visit your home
The insurance adjuster will inspect your home and for damages.
Before they arrive, have a list of all damage to your knowledge. You’ll also want to make sure the inspector can access parts of your home where the accident or loss took place.
You’ll want to write down notes of what you discussed.
If you don’t agree with the adjuster’s assessment or have questions about the inspection, don’t be afraid to raise them with your insurance company.
It’s best to suss things out before any repairs are completed.
Keep receipts of all expenses
Did you spend money to patch up damaged areas of your home? Or had to pay for meals, a place to stay, or other expenses while you were temporarily uprooted? If so, hold on to all your receipts.
You can also take photos on your phone or all receipts and keep them on a folder on your computer as a backup.
Know your policy front and back
Whether you decide to file a claim or not, you’ll want to be in the know with what exactly your policy covers, what it doesn’t include, coverage amounts, and any limits and restrictions.
The beauty of home insurance policies is that you can always review it to make sure it’s in line with your current needs.
What’s more, you can shop around and switch to another provider for better rates or coverage.