The Worst Homeowners Insurance Claim Mistakes

In light of the complexity of home insurance, submitting a claim on your home's insurance is no surprise—especially in the event of substantial damage or a complicated claim. You may, however, avoid making some of the most common errors when filing a home insurance claim.

A claim in 2020 may appear more likely than ever before. The eastern United States is amidst its usual hurricane and tropical storm season. On the other hand, the western part of the United States has already begun its annual battle against wildfires and anything Mother Nature throws at it.

Most recent figures from the Insurance Information Institute show that over 6% of homeowners with insurance had a claim filed in 2018. The majority of those claims (98 percent) involved damage to the home or business (including theft).

You can do a few things to help expedite the claims process if you've suffered a loss and need to lodge a claim. Here are a few things to avoid regarding house insurance claims.

The No. 1 Mistake in Filing a Home Insurance Claim: Not Reading Your Policy

It's understandable if you haven't read the fine print of your homeowners' insurance policy. As a result, insurance policies are often difficult to understand. However, this does not absolve you of responsibility. According to Charlie Wendland, head of claims at Branch, an internet insurance startup, you should at the very least know what the coverages in your policy mean.

It's common for people to confuse "water backup" coverage with flood insurance. This isn't true. Only damage caused by a sewer drain or sump pump backup is covered by water backup. Disappointment might result from not knowing (or not reading) your policy, which nearly always leads to a negative customer experience during the claims process.

Two: Not Having the Correct Coverage When Filing an Insurance Claim for Your Home

Uninsured motorist coverage can put you in a tough spot financially. These mistakes can be avoided if you thoroughly talk to an insurance representative.

Your expectations of being compensated for replacement costs may be dashed if your policy only covers the actual monetary value of your belongings.

Some homeowners assume that their insurance coverage covers hurricane wind and flood water damage. However, making that assumption could prove to be an expensive error. Wind and flood damage is typically not covered by regular home insurance policies in hurricane-prone areas. To ensure that you have adequate protection in a hurricane, a sound hurricane insurance strategy may include three or more policies.

When it comes to insurance, exclusions might haunt you, especially if you reside in an area prone to natural catastrophes.

Three: Not Maintaining an Inventory of Your Property

If your home is damaged, it's a good idea to keep a detailed inventory of your belongings. A detailed inventory of your belongings is especially important if your home has sustained major damage. Your claim will be incomplete if you have to rely solely on your memories when preparing it.

Of course, you'll recall the items in your living room. Is it possible that you won't be able to recall anything that you have stashed away in your cabinets and drawers? If you have a home inventory, filing your insurance claim will be simpler and faster than without one.

Four: Failing to Maintain Your Property

Insurance for your home is meant to cover damage that wasn't expected, not problems that could have been avoided.

If you don't take care of your house, you risk having problems that your insurance won't cover. For example, a burst water pipe is covered under the policy. As long as the roof leak is fixed, the insurance company may deny the claim because the harm was not prevented.

Five: A Lack of Effective Communication

Poor communication is the most common cause of home insurance claim errors. Homeowners are notoriously vague when stating their property's damage throughout the claims process.

The claims process can be slowed significantly if the homeowner's claim is not properly communicated. Any damage to the home must be described in detail by the homeowner when filing an insurance claim.

Six: Waiting to File An Insurance Claim

Another blunder is waiting too long before submitting a claim. Injuries don't heal over time. Making a claim right away can help expedite the repair procedure and reduce the insured's amount of time to deal with the repair process.

You may be able to file a claim for up to a year after the deadline has passed (it depends on the state). Waiting has no advantage. The sooner your house is repaired after a storm or wildfire, the better.

Seven: Attempting to Handle the Entire Claim On Your Own

In the case of large and expensive claims, the process might be lengthy and complicated. With many insurance adjusters and mountains of documentation, you may have to wait for your claim to be processed.

A public claims adjuster can help if your home has sustained substantial damage. As a client, you'll have someone working on your behalf to interact with the insurance company's adjusters, ensure you have the necessary paperwork, and fulfill all deadlines.

A public insurance adjuster's fee is typically 20% of the insurance payout. As a result of their assistance in obtaining your rights and decreasing your anxiety, they may be well worth the investment.

Eight: Not Keeping Records of Damage

The most common mistake is not documenting damage. It's not just taking images; it's documenting the harm as soon as it's found.

When you're filing a claim, photos are your best friend. As a best practice, you should have "before" and "after" images of the damage to your property. This can make a big difference when it comes to settling the claim.

Nine: Cleaning Up Too Quickly

When something bad happens, it's natural to want to get the damage cleaned up as soon as possible. Cleaning up too quickly might be a costly error.

Before the full extent of the damage is known, it is not uncommon for homeowners to discard belongings that have been damaged in a fire or flood. They often throw away receipts that could be used to back up a claim. Before submitting it, you should store the damaged item until you have enough evidence to support a claim, such as photos or repair estimates.

During a claim, it's critical to keep a detailed record of everything that happens. If you don't, you could end yourself with a costly home insurance claim.

Ten: Making Too Many Claims.

When determining your premiums, insurers will look at the claims history you've had in the past. Comprehensive Loss Underwriting Exchange (CLUE) is an insurance claim database that insurers can search for claims made in the prior seven years. The more claims you have on your house insurance, the more expensive your rates will be.

So, insurers think of claims as a sign that people are more likely to file new ones. Customers who are considered high-risk have higher premiums charged to them. It may be better to pay for minor repairs yourself rather than file an insurance claim in the long run, so long as you can afford it.