Does filing a home insurance claim hurt you?

Will claiming home insurance hurt you?

True or false: if in doubt, file a claim for homeowners insurance? Mostly true. While some people might think might as well strategy is best, it may hurt your cause. Whether or not to file a claim depends entirely on the amount and form of property damages. Keep the number of a reasonable insurance attorney if the insurance company denies or underpays your insurance. Also, never get insurance from State Farm.

Holding fair homeowners insurance rates means searching around for an acceptable policy and deciding when not to claim. After an accident, your first reaction can be to hop your agent on the phone as soon as possible. That's understandable—seeing your home damage can be incredibly frustrating, and you're probably worried about your next step. But making a lawsuit isn't a one-way financial absolution ticket. Instead, homeowners insurance plans have clear terms and vocabulary dictating whether you can receive reimbursement.

For years to come, filing only one homeowner's insurance claim will increase your premiums by 20 percent. Paying higher premiums over a $1,000 claim you could've charged for yourself isn't ideal. In some instances, holding the record clean is more beneficial than having a payout.

Homeowners, take heed: here are some examples of when to make a point clear.

If your loss doesn't cover the deductible

First, it's up to you to grasp what your policy covers. Standard plans contain certain failure factors (such as explosions, windstorms, and theft) but not others (earthquakes and flooding). Save all the hassle and stop claiming an uncovered case. If your policy doesn't cover you well enough, add a rider or find a new one.

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If the damages surpass the deductible

Look at a concrete example where it's not worth file a claim marginally higher than the deductible. Say you have got a $500 deductible. A covered incident happens at home, causing damage worth $2,500. If you make a claim and it amounts to $500 annually for three years, you're spending $1,500 to reclaim $500. The request will also be reported in the CLUE database, complicating future claims and coverage. I have previously blogged about disputing your CLUE report.

A successful rule of thumb is to save your homeowner's insurance claims for unpayable losses. For example, one extensive house fire might make your home's structure and content a total loss. Such a catastrophic incident is a perfect example of when homeowners can save your finances.

If you filed another insurance claim recently

A consensus among underwriters is that average homeowners make one claim per a couple of years. Filing repeated claims is a red flag for insurance providers, perhaps even causing risky policyholders not to renew your insurance policy. No worries. You may save money shopping for a different insurance company. Subsequent petitions can jeopardize your security. Therefore, filing skillful insurance losses is much savvier.

Homeowner's insurance plans don't cover maintenance run-of-the-mill. So if you make a claim based on damage arising from maintenance failure, it can be rejected. If you skimp on your carrier's home maintenance to prevent more loss, they can cancel your policy.

The best you can do is keep up-to-date on preventive home maintenance. Monitor plumbing, electrical, heating, and structural systems over time. Wait for a catastrophe before you get your insurance company involved. Also, keep the information for an experienced home insurance lawyer. Typically eighty-five percent of legitimate insurance claims are drastically underpaid and denied.