What is a claim?
A claim is a formal request to your insurance company to investigate and pay for a loss under your policy. Homeowners typically file a claim when they encounter a loss, such as damage caused by:
The claims process starts with a first notice of loss (FNOL) that alerts your insurer of a loss. From there, a claims specialist typically guides you through the rest of the process. These steps may include:
If your loss is covered by your home insurance, then your claim may be paid in a few ways. A common one is for the named insured to get the proceeds in the form of a check or by direct deposit, minus your deductible. If you have a mortgage, however, claim payments for damage to your home’s structure may include to your lender.
How do policyholders make a claim?
Most home insurance policies include a section called “Conditions” that lists your duties as a policyholder. This is where you’ll find instructions for making a claim. Policies and providers may have different requirements, but most want you to:
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Promptly report claims to your provider or insurance agent.
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Provide information, like your name, policy number, and details about the loss.
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Give the names of any witnesses or people who may have a claim against you.
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Send documents, invoices, receipts, and pleadings associated with the loss, like police reports.
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Assist with the investigation and/or lawsuit.
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Authorize them to review medical records and reports if someone is injured.
Prompt reporting of a loss is essential. Depending on the situation, a delay may hinder your insurance company’s ability to determine the cause of your loss, which can result in it denying your claim, leaving you on the hook for repairs, medical bills, and potential lawsuits.
Once you alert your insurance company about the claim, it might send an insurance adjuster to your home. This person estimates the amount of damages, which they then discuss with another adjuster for your claim, called the desk adjuster. The desk adjuster goes over your policy to determine what damages are covered and issues payment for the covered repairs based on your policy terms and coverage limits.
Your payment may take into account:
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Your deductible. This amount is deducted from your claim payout.
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The type of coverage you chose when you purchased your policy. Opting for actual cash value (ACV) coverage means your insurance covers the depreciated value of your property. A replacement cost policy pays out more, covering what it costs to replace your property with a new item of similar quality.
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Your mortgage lender. Most policies require your lenders to be included in payment for buildings. That means claim payments will include both you and your lender as payees. Condo owners and your management company may have similar requirements.
Even after a claim payment is issued, you can still reopen your claim if you find additional damage. Most policies give you a year after the loss event to file, but ask your representative or review your policy to be sure.
To file or not to file?
Homeowners sometimes avoid filing claims because they don’t want their premiums to go up. However, in some cases – acts of God, for example – insurers are actually prohibited from holding a claim against you. They can’t use these claims when calculating your premium, and they can’t be used as a reason for the insurer not to renew your policy.
Even if you’re looking at minor damage from a covered peril, it’s a good idea to notify your insurance company and at least start the claims process. Most homeowners policies require you to file an FNOL if you experience a loss or anticipate a liability claim.
3 tips for filing an insurance claim
Filing a claim can be daunting if you don’t know what to expect. These tips may help make the claims process easier:
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Plan ahead. Ideally, you’d never have to file a claim, but you want to be prepared in case you do. Create a home inventory that includes serial numbers, important receipts, and appraisals. Keep this and a copy of your insurance policy in a fireproof safe.
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Only make necessary or temporary repairs. While your policy likely requires you to minimize your damages, you also need the adjuster to see the damage as it is. If you have to make repairs to keep people safe or to stop additional problems, be sure to take a lot of pictures or videos first and report it to your insurer.
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Keep your receipts. If you spend money on temporary repairs or housing, hold on to your receipts. Your policy may cover them.
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