How Home Insurance Claims Work

If you own your home, you probably have a homeowner’s insurance policy. If you have a mortgage, you likely pay into an escrow account for this expense and rarely think about your policy – unless the unexpected happens! A house could sustain damage in a multitude of ways. Not to mention the garage, landscaping, neighboring properties, and the people who spend time in all those places!

Filing a home insurance claim can seem overwhelming, but most agents will work hard to keep you informed and get your property and life back to normal as soon as possible. This blog will walk you through some of the ins and outs of the home insurance claim process.

Know Your Policy

No two homes are identical. Naturally, no two insurance policies are identical, either. Read your policy yearly to know what is covered, the amount of coverage, and whether your policy allows for full replacement of lost, stolen, or damaged property. It also pays to know whether you have optional riders like flood coverage, mold remediation, and identity theft recovery.

Claims Resulting from Typical Property Damage

This section refers to insurance claims resulting from natural disasters, mechanical defects, homeowner error, or other non-criminal events. The first and ongoing step to take is to keep documentation of all events. Take photos, note times and dates, and record anything that was lost or damaged. Notify your insurance company of the claim-related incident as soon as possible. Usually this means calling your agent. He or she may have some additional documentation for you to fill out and will also conduct a phone interview.

Make urgent repairs if needed, especially if you are inhabiting the property for the duration of the claim process. Document the repairs you make or hire out and keep a paper trail of all expenses paid and/or invoiced.

An insurance appraiser will want to visit the property to take photos and document the scene. The appraiser will report back to your insurer to determine the amount of compensation you can expect. It helps the claim move forward if the homeowner is present for the appraisal to answer questions and explain the property’s condition prior to the incident. Your insurer may consult with an adjuster to finalize the amount of reimbursement they are willing to offer.

Stay in frequent communication with your agent and other parties assigned to your case – This will help keep the claim process moving when it’s time to begin the repair and replacement phase.

Claims Resulting from a Crime

Start by filing a police report if you haven’t already. Crimes like theft, vandalism, and arson may be covered under your homeowner’s policy. Your insurance company will need a copy of the report to process your claim. After that, the process is similar to that for claims resulting from property damage due to defect or loss. The homeowner reports the loss to his or her insurance agent and the claims process begins.

Personal Injury Claims

If an accidental at your property results in someone being injured, it may be advisable to file a claim with your homeowner’s insurance provider. This is called a “third party” claim, because someone other than the insured is seeking compensation. If the personal injury claim involves a lawsuit against you, your insurance company might also provide legal defense on your behalf.

If you want to know whether personal injury and/or liability are covered under your policy, discuss with your insurance agent. This is something you may be able to add if you don’t have it in place already.

Total Loss/Displacement of Residents

If an event at your property results in a total loss and/or if your home is not inhabitable as a result of an insured claim, your insurance company will arrange for temporary housing and cost of living expenses. Sometimes this means moving several times, from emergency housing to a longer-term situation and finally back into your (rebuilt) insured dwelling.

What if you don’t agree with your insurance company?

If think your insurance company’s settlement offer is too low, or if they have declined insurance on all or part of your claim, you do have recourse. Start by contacting your insurance agent to let them know about the disagreement. You may want to hold on cashing any payout checks until your dispute is resolved. Next, you may want to hire an independent adjustor. This is a third-party professional (not affiliated with your insurance company) who is trained to assess and appraise insurance claims. If the independent adjustor’s appraisal is higher than the one provided by your insurer, contact your agent to discuss the discrepancy.

In the unlikely event that you are unable to reach an agreement with your insurance company, consider hiring an attorney and filing a complaint with your state’s Department of Insurance.

A Word on Home Warranties

Home warranties have gained popularity in recent years. Many real estate purchase agreements include the condition that the seller will pay for all or part of a home warranty on behalf of the buyer. This is not the same as homeowner’s insurance. Rather, a home warranty is a service contract that covers named repairs and replacements for things like the hot water heater or electrical system. Home warranties can be called in when normal wear and tear occurs, whereas homeowner’s insurance covers unexpected perils.