When You Should (and Shouldn’t) File a Home Insurance Claim

Homeowner’s insurance is a recommended (and, if you have a mortgage, required ) investment in the safety of your home. While these policies help mitigate significant financial losses in the event of damage or destruction, they do not cover all issues requiring replacement or repair. There are situations where it makes sense to file a claim, and there are situations where it should be avoided.

When Not to Apply for Homeowner’s Insurance

Unfortunately, your homeowner’s insurance policy does not cover all damage and repairs. Here are situations where you should not file a claim.

Your policy does not cover the problem

Homeowner’s insurance policies have quite a few exceptions , so even if you try to file a claim, you will be denied. Here are some of the things you (probably) do yourself:

• Natural disasters
• water damage
• Infestation by beetles and rodents
• Trampolines, trampolines and treehouses
• Damage due to repair
• Business use (such as Airbnb)
• External Communications and Communications

Of course, there is a nuance in the above. For example, while your policy usually covers damage caused by fire, lightning, hail, hurricanes, tornadoes, and some weather conditions, you’re out of luck when it comes to earthquakes, floods, tsunamis, and nuclear explosions. Homeowner’s insurance also covers “sudden and accidental” water damage, but does not cover issues such as sewer backups and slow leaks.

You failed to keep up with maintenance

Apart from specific exceptions, homeowner’s insurance does not cover problems arising from negligence. If you fail to fix a damaged roof or replace rusted pipes, you will be on the hook for any water damage. Likewise, policies do not cover normal wear and tear that results from daily living in your home, such as worn floors, peeling paint, and warped doors.

Your deductible is higher than the cost of repairs

If the damage you need to fix is ​​minimal and below the deductible amount, you may be better off paying for the repair or replacement out of pocket. Not only will you not get any benefit if your insurer denies the claim—and the payout is minimal even if you go over your deductible a little—your insurance premiums could go up as a result.

You have already filed multiple claims

Filing a large number of claims in a short amount of time can increase your insurance premium or cause your carrier to cancel your policy entirely , leaving you only entitled to high-priced, high-risk insurance. Claims are reported to a database called the Comprehensive Claims Underwriting Exchange (CLUE), which insurers view and consider when determining premiums and awarding policies.

Of course, if you have multiple instances of significant damage, that’s what your homeowner’s insurance is for. But try not to file a bunch of small claims within five years if you don’t have to.

When to Apply for Homeowner’s Insurance

When you pay for homeowner’s insurance, you want to benefit, but only if it makes financial sense. That’s when it probably happens.

Repairs will cost more than your deductible

If home damage repair would only cost a few hundred dollars and doesn’t even qualify for a deductible on your policy, you don’t need to worry about filing an insurance claim. Deductibles can range from $500 to $2,500, and some policies have different deductibles for different types of damages.

Take the time to calculate what percentage of the cost your insurance company will cover after you pay the deductible – if it’s, say, 25%, the potential increase in your premium may not be offset. On the other hand, if it covers 75%, it’s worth it.

The damage is significant (and covered by your policy)

As described, homeowner’s insurance only applies in some cases of damage, and it makes sense to use it if the policy actually pays out to cover what needs to be repaired. You must make sure to apply for covered activities that will cost you more than your deductible and otherwise cost you tens or hundreds of thousands of dollars.

Do you have additional approval

Although we have named a whole list of homeowner insurance exclusions, you should definitely apply if your claim is covered by any add-ons you paid for, such as valuable personal property or jewelry approval or sewer backup coverage. Repair or replacement in these cases is usually expensive if paid out of your own pocket.