When to File a Property Damage Claim

Your home insurance policy covers a wide range of risks, but there are times when you might not want to place a claim. Your policy offers protection against life-changing losses for covered perils, high-impact financial situations in which your policy demonstrates its value. Minor losses may or may not be the best long-term claim choices, however. 

Here are some factors to consider before making a claim.

Does my policy cover the loss?

Become familiar with what your policy covers — and what it doesn’t. Many home insurance policies cover your home for what insurers call “all risks.” However, another section of your policy demonstrates that the “all risks” moniker has some limitations. For example, a standard home insurance policy doesn’t cover losses due to floods. Similarly, a standard policy doesn’t provide coverage for damage due to sewer backups, although some insurers offer a rider to address this coverage gap.

Discuss your coverage with your agent or broker to find out which options you have that can address risks not covered or risks specific to your location. With the right coverage in place, you’ll have the option to place a claim if needed.

What’s your deductible?

The deductible is the part of the claim paid by the policyholder. Within the mechanics of a claim, you don’t actually pay the insurer in most cases. Instead, the insurer deducts this amount from the claim payment. As an example, if you have a $2,500 deductible and a $3,000 loss, the insurer would deduct $2,500 from the claim payment, leaving you with $500.

In this situation, you may not want to place a claim. The claim on your insurance history might lead to increased premiums, which could end up costing more than the $500 you received in the claim. Insurance excels at providing coverage for larger losses. However, for smaller losses, it may not pay to make a claim.

Discuss your deductibles with your agent or broker to be sure that your deductibles are a good fit for your budget or savings. But also use the conversation to build your understanding of when deductibles apply and which deductibles your policy has.

What are your policy limits?

Some policies place a coverage limit on certain parts of your home, such as roofs. Insurers see a roof as a wear item, so your coverage may be for less than the cost of repair or replacement if your roof is older. Deductibles may also play a role in a roof claim
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Other parts of your coverage may have separate coverage limits as well, such as electronics. 

Review your coverage with your agent or broker

Your home insurance policy can be a powerful financial tool to protect against larger financial losses and brings a myriad of customization options. In many cases, you can adjust your policy to suit your needs better. You can also consider building an emergency fund to help pay for unexpected losses that might not reach the threshold where it makes sense to place a claim.