How Does the Homeowners Insurance Claims Process Work?

When you make a claim with your home insurance company, a claims estimator will look at the damage, gather proof, decide if the claim should be paid, and figure out how much the claim should be paid. Most of the time, you’ll get your money in stages as the fixes are done on your house. Here’s what to expect and how to file a claim on your home insurance.

When to Make a Claim on Your Home Insurance

If you know your insurance will cover the loss, the cost of fixes is more than your deductible, and you haven’t made a claim in the last few years, you should make a claim.

The loss might be covered by your homeowner’s insurance. You can look at the contract or call the company to find out. Most homeowner’s insurance includes damage to your house and belongings caused by fire, smoke, wind, hail, lightning, and some types of water damage, as long as the coverage limits are met.

Home insurance usually covers legal and medical fees if a guest gets hurt on your land. It also pays for extra living costs (ALE) if you have to leave your home while fixes are being made. If you have separate insurance for flood or earthquake damage, you can file a claim with that insurance company instead of your homeowner’s insurance.

In most cases, you shouldn’t make a claim with your house insurance unless the fixes will cost a lot more than your deductible. Your home insurance deductible is the amount you have to pay when you make a claim. It is taken out of the amount your insurance company pays you when you make a claim.

Say your deductible is $1,000. A claim for $15,000 in fixes would get you $14,000. The claim for $1,500 in repairs, on the other hand, would only pay out $500. It might be better to pay for the repairs yourself, maybe by using your emergency fund.

Your rates may go up if you file a claim, especially if you do it more than once in a few years. If you make too many claims, your insurance company might even cancel your policy. When choosing whether to make a claim, keep in mind that homeowner’s insurance is meant to cover big losses, not small fixes.

How to Make a Claim on Your Home Insurance

Here are the steps you need to take to file a renters insurance claim:

Call the cops if there was a crime. For example, if someone broke into or damaged your house, the cops will come and make a report, which you will need to back up your claim.
Get in touch with your insurance company. Most of the time, you can start the claims process online, over the phone, or with your insurance company’s app.

A claims agent will be given your claim and tell you what to do next. The claims adjuster will handle your claim and give you a claim number.
Write down the damage. If your home or things get damaged, take pictures and movies of it. Also, use a house inventory list to keep track of what was stolen, damaged, or killed and how much it was worth. Don’t get rid of broken things until the claims agent tells you it’s okay to do so.

Fix what needs to be fixed. You can stop more damage to your home by doing things like making emergency fixes to keep out the weather and people who don’t belong there. Before you fix the damage, take pictures of it and keep the papers for any money you spend on repairs.
Get quotes on fixing up your house. Get prices from qualified workers. This information can help your claims agent figure out how much the fixes will cost.

Keep careful records. While your claim is being looked into, write down who you talk to, what they say, and anything else you might need later. Make sure you keep copies of everything you give the insurance company.

What Happens After You File a Claim on Your Homeowners Insurance?

When you make a claim on your home insurance, the claims agent will likely do the following.

Check out the damage. Most of the time, this means coming to your house in person, but some testers may use technology to do a video check.
Get records together. The claims estimator might ask to see your pictures, videos, or lists of what you have in your home, along with any quotes you’ve gotten from workers for repairs. Usually, they’ll also take their own pictures, videos, and notes, and they might ask workers for more quotes.

Figure out what to do about your claim. Based on the proof they’ve collected, the claims estimator will tell you whether your claim should be denied or paid, and they will also figure out how much to pay you.

How does the claim payment work? The claims assessor will tell you what kind of payment you can expect, like whether you’ll get the real cash value or the new cash value for your things.

Get in touch with your insurance company if you think your claim was rejected unfairly. Sometimes, all they need is more information to settle the claim. You can make an appeal with the insurance company or call the department of insurance in your state if you’re still not happy.

What will happen if you have to leave your house while it’s being fixed up?

If the claims agent says your home isn’t safe to live in and you need to temporarily move out, your home insurance will usually cover the extra costs of living somewhere else. Some examples are rent, keeping pets, eating out or getting takeaway, transportation, or getting utilities set up. Talk to your insurance company about what costs they will cover and if there are any time or dollar limits on their coverage.

Don’t forget that your home insurance only covers extra costs of living. If you normally spend $800 a month on food but $1,200 a month on restaurant meals while you’re moving, your insurance will only cover the $400 difference, not the full $1,200.

Also, ALE costs must be fair based on how much you currently earn and live. That is, if you have a simple house, your home insurance won’t cover a fancy high room. On the other hand, if you have a five-bedroom house, you don’t need to put your six-person family in a studio apartment. It could take months or even years to fix up or rebuild your home, so think about where you will stay temporarily.

What happens after your insurance claim for your home is settled?

When your homes insurance claim is settled, you’ll get the settlement amount (less your deductible) paid to you. It can be different when and how you get paid and how many checks you get.

Usually, you’ll get a different check for each type of coverage (home, belongings, and extra living costs). This works like this most of the time:

If you have a debt on your home, the cheque may be made out to both you and your lender, or it may go straight to your lender. Once your backer gets the cheque, call them to find out how the fixes will be paid for. The payment money could be put in a trust account so that lenders can use it to pay for fixes. Before giving you a payment, your lender may also want to check with workers or see that the fixes are done properly.

Personal property coverage: Your home insurance may cover either the real cash value (what the things are worth now) or the replacement cost (how much it would cost to buy new ones that are similar). In either case, you’ll get a cheque for the real cash value of your things right away. You’ll usually get the difference in cost back from the insurance company after you buy new things and send in the papers. Find out from the insurance company if you need to replace the things by a certain date.

Extra costs of living: Your insurance company probably won’t give you an ALE payment right away. You’ll pay for your living costs up front and then send your insurance company your papers to get your money back.

After a claim, does the cost of home insurance go up?

There are a lot of things that can cause your home insurance to go up after a claim. Some of these are your insurance company, the type of claim, and your past of claims. (If nothing else, you won’t get any savings for not making a claim.)

Most of the time, insurers look at a home’s Comprehensive Loss Underwriting Exchange (C.L.U.E.) report from seven years ago when setting rates. If there were any claims made during that time, even by a previous landlord, making another claim could make your rates go up. If you make too many claims, your insurance company may decide that your home is too dangerous to cover.

Your home insurance rates may go up or down depending on the type of claim you make. According to data from Insure.com, weather-related claims have the least effect on rates, which go up by an average of 17%. The biggest effect is fire claims, which cause rates to rise by an average of 29%.

How to get better deals on home insurance

You can still get better deals on home insurance even after you’ve made a claim.

Raise your deductible. Most of the time, a bigger deposit means lower rates. Talk to your insurance company about how different fees might change your rates.
Cut down on your risk. If you make your home better, you might be able to get lower home insurance rates. For example, if you put in a burglar alarm, fire alarm, pool safety gate, or locking locks, you might be able to get lower rates.

Bring your home up to date. If your house is older, the roof, water, or electricity system may be more likely to break down, which could lead to an insurance claim. You might be able to save money on your rates if you replace old systems with new ones that meet current building codes.

Bundle your insurance. Bundling is when you buy more than one policy from the same insurance company, like home and car insurance. Usually, you can get lower rates when you bundle your policies.
Look into savings. You might be able to get discounts on your home insurance through your job or a club group. You might also get discounts if you buy your policy online, set up automatic payments, or choose paperless bills. Find out what price cuts different companies offer.

Look around. You can get quotes on home insurance by calling companies, going to their websites, or using online insurance markets to get rates from more than one company. After getting a few quotes, you can compare them to find the best deal.

In Short

If you are worried about your rates going up, don’t file a claim for your home insurance when you need to. Keeping your credit in good shape is one way to help keep your home insurance rates low. Credit-based insurance scores can be used by most states to help decide how much you should pay for insurance. If your number is better, your premiums might go down.

Credit-based insurance scores are different from your regular credit scores, but they are based on a lot of the same information. This means that if you improve your regular credit score, it could also improve your credit-based insurance score. As you work to raise your credit score, you might want to sign up for Experian’s free credit tracking service. As your FICO® Score goes up or down, you’ll be able to see it and get alerts when your Experian credit report changes something important. This way, you’ll always know where you stand.