When & When Not to File a Home Insurance Claim

Insurance is a concept of sharing the risks of severe or catastrophic loss among many participants. The idea is to pay a small amount regularly to avoid absorbing crippling out-of-pocket losses without coverage. 

An intelligent way insureds keep their NJ Home Insurance premiums lower is by recognizing how home insurance claims work. They know when to file homeowner insurance claims. Equally important is they also know when not to file claims for their homeowners insurance. When it comes to making a home insurance claim, it’s good to know that just because you can doesn’t mean you should. Filing claims is not always the best option.

There are circumstances of loss so evident that making a claim is automatic. They are the things we insure against and hope never happens, such as fire or tornados. It’s also automatic that a loss that costs less the deductible doesn’t qualify for a claim. Claims that fall in between those situations need consideration to determine the best course of action.

When to File a Homeowners Insurance Claim

There are situations when you should file a claim. The clearest cases are when it’s considered a total loss or there is substantial damage. And, similarly, when the assessed repair or replacement costs are considerably greater than the policy deductible. If you, unfortunately, suffer a severe loss covered by your homeowners policy, you should file a claim to avoid taking a substantial financial hit. 

Please do all you can to preserve and safeguard your property and save your claims for events when you need them. Upkeep is worth doing because it favors your insurance premium and boosts your property value.

When Not to File a Homeowners Insurance Claim   

Filing homeowner insurance claims has consequences that make it essential to be mindful of how they can affect your premium and coverage availability. A poor claims history will cause your rates to rise. In a worst-case scenario, too many claims can cause insurers to cancel or non-renew a policy and obtaining replacement coverage may be difficult or more costly. 

Examples of when not to make a home insurance claim include: 

• The damage is caused by a peril, such as acts of war that your policy excludes.
• The amount of the damage is less than the policy’s deductible amount.
• The root cause of the damage relates to a lack of maintenance by the homeowner. For instance, a creaky fence in a state of disrepair is blown over by a windstorm. 
• It’s a second claim that is not a catastrophic loss in the past three years.

Just as a deductible is a form of self-insurance that helps lower premiums, so is taking a loss that exceeds the policy deductible amount. Circumstance varies making decisions about whether to file claims a value judgment. Is it worth filing a claim for a $1,500 loss with a $1,000 deductible? There are no fast answers. Factors to consider are your claims history, your carrier’s history with claims, and how competitive insurance markets are now—which are good reasons to have a relationship with your agent so you can inquire. If you cover the loss, you will likely earn it back in lower premiums over time, as any good self-insurance practice should. 

It is typical in the home insurance business to see rate hikes after claims are made, even when the cause was out of the homeowner’s control. Knowing claims history can affect your premium is why it’s critical to be thoughtful when considering whether to file a claim. Up to seven years of your claims record is kept on the Comprehensive Loss Underwriting Exchange (CLUE). Insurance companies use CLUE reports to help gauge how likely customers and prospects are to file claims. 

A piece of solid advice is to work with an insurance agency that offers the option to talk with professionals who know you and your NJ Home Insurance situation. You want experts who are well-versed in current homeowner insurance market conditions. Ideally, your local agent will have contracts with multiple carriers to provide you with the benefit of having more than a single solution to your homeowner insurance needs. At the Dickstein Agency, we take pride in how our NJ Home Insurance clients get satisfying results from working with us. 

About Dickstein Associates Agency

Dickstein Associates Agency has distinguished itself as a leading provider of personal and business insurance in the tri-state area for over 55 years. We pride ourselves on being advocates for our clients and providing them with quality and affordable coverages. As Trusted Choice™ independent insurance agency, we partner with various national and regional carriers, allowing for flexible and unbiased coverage for each client’s unique circumstances. For more information on how you can leverage all of your insurance to work best for you, and how we can secure the best insurance in the marketplace based on your specific needs and business objectives, contact us today at (800) 862-6662.