When I first started in this industry, it was very common to submit a homeowners insurance claim every time something happened. This was also the time of $100 deductibles, looser underwriting and no claims surcharges. However, it is no longer a good idea to submit a claim every time you notice something wrong. I’ve listed the top 5 reasons below.
When your claim is less than your deductible
So, you have a $1,000 deductible on your homeowners insurance policy. A wind comes along and blows off a handful of shingles. Unless those shingles cost more than $1000, you don’t have a claim. So there’s no reason to turn it in.
Or let’s say you turn too quickly into your garage and rip off a side mirror. This would be considered a collision claim and let’s say your deductible is $500. Again, unless the damage is over $500, you don’t have a claim.
So how do you know the cost to repair? Get an estimate. Unless you know how much it’s going to cost, you have no idea if you have a claim or not. We regularly recommend this approach and then customers can make an informed decision whether or not to turn in the claim.
And another word of advice from someone who’s been in insurance a long time……. even if your cost to fix is over the deductible, how much over the deductible matters too. $1000 deductible and cost to fix shingles is $1500? This means you pay the first $1000 and the insurance company pays the $500. Might not be worth it to turn it in. Mirror costs $550? Might just want to pay out of pocket. Because…
Insurance companies are now applying claims surcharges
So a common tactic that insurance companies now use on homeowners insurance is to apply a claims surcharge. This can be applied for the FIRST claim and even for a filed claim with ZERO payout. So it’s really not a good idea to just turn in one claim after another, because even zero payout claims can count against you.
And the surcharge can stay on the policy for several years. In other words, save the insurance policy for the big stuff.
The damage is from normal wear & tear or not sudden & accidental
Homeowners insurance does NOT cover normal wear & tear. It is for SUDDEN & ACCIDENTAL occurrences. For example, the hailstorm that comes through. Or a windstorm, tornado or other sudden weather event (excluding flood, as that is covered on a flood policy). Or heaven forbid, a fire. There are many other examples of course, but the sudden & accidental language is super important here.
Let’s say you notice mold growing on your bathroom wall. Mold does not appear overnight (not sudden & accidental). It’s a sign of an ongoing moisture problem that has taken time to develop.
Or maybe your roof is old, showing signs of wear and needs replaced, but you just keep putting it off. A heavy rain occurs and water comes in through the roof. The claim could easily be denied because the worn-out roof is what caused the water to seep through.
And because roofs are such popular source of claims dissatisfaction, here’s a helpful article that helps to explain why.
Home insurance expressly covers sudden and accidental damage to your home. If the damage is caused by neglect, the insurer considers that the homeowner’s responsibility.
You’ve filed other claims within the past few years
Too many claims in too short a period of time is a big red flag to homeowners insurance companies. And the next actions they can take include the surcharges mentioned previously, higher deductibles, removal of coverage or cancellation.
Because it affects your ability to get homeowners insurance in the future
Let’s say you want to shop around for homeowners insurance. Prior claims (paid and unpaid) MATTER. Even 2 in the last 3 years can cause a company to say “Nope- can’t help you.” So a bunch of submitted claims will affect your insurability in the future.
So how do I know when to submit a homeowners insurance claim?
Your insurance agent is your BEST resource. Don’t have an agent, but bought direct from the insurance company? You can certainly call and see if they can offer you advice. However, as insurance agents, we can discuss the situation with you, help decide if it’s a covered claim (if we are able to), and discuss the possible consequences of turning in the claim. Sometimes we aren’t able to determine if covered or not, due to the complexity or nature of the claim. In those situations, we have no choice but to submit and let the carrier research. But, at least we can have a discussion and help you make an informed decision.
Here’s an article that may help as well- Top 4 Reasons to file an Insurance Claim.