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When should you file a home insurance claim or pay out-of-pocket?

Knowing when to file a home insurance claim can be tricky, and can even cost you more than you might expect with increased premiums and possible surcharges. Sometimes you just have to file a claim so you don’t pay everything out-of-pocket, and take the long-term hit of an increased rate and additional surcharge(s). Other times, filing a claim on your home insurance is completely unnecessary and will save you money by keeping your premiums where they’re at by paying the relatively small amount on your own to fix any damage. 


Do talk with your independent insurance agent

Depending on the amount of loss or damage or the cause of the damage, it might not make sense to file a claim. If the repair will cost $1500 and you have a $1000 deductible-it might not be worth filing claim. Talk to your independent agent before you call your company’s claim department. Even if you just call the claim office for information and a claim is never processed, it will show up in the Comprehensive Loss Underwriting Exchange (CLUE) report as claim activity. Some companies actually count this a claim! So talk to your agent before you talk to the company claim office. 

Do take pictures of everything

If a tree falls through your roof, your bathtub crashes through the ceiling and into your living room, or a pipe bursts and floods your basement—start taking pictures. Photos and/or video of any damage to your home can help the insurance company determine how the damage was caused. Even if the claim is a valid covered loss there may be a surcharge. This is how a company recovers the monies paid out for a claim.

Do beware of claim surcharges

Claims can easily result in getting surcharged by the insurance company. A surcharge is an additional charge applied to an individual policy.

If you do not like the way your company has handled the claim, feel free to shop around. But you have to wait until this current claim has closed. No company will take on a new “risk” with an open claim.

Insurance companies exist only to pay claims. If you are searching for a new company, look for one who has good rates, rewards longevity, handles claims fairly and has a high rating with AM BEST (a company that rates the financial viability of insurance companies). Typically, the higher the AM BEST rating, the more stable the company. 

Do make sure your claim gets paid

If the adjuster comes back with a claim settlement offer and you disagree, ask your agent for assistance. They may be able to offer some advice for a better settlement. In extreme cases (either a large or a total home loss) you might have to contact a public adjuster. They work for you (the insured) and deal directly with the insurance company on your behalf to obtain the best settlement possible for you. They usually get paid a percentage of the settlement.

Do make your deductible a little higher

An insurance policy is not a repair policy. It is designed to be used in the event of a catastrophic event. After filing a claim, consider raising your homeowners deductible to $1000 or even $2500 if you haven’t done so already. This will usually lower your premiums, and may help offset any surcharges from the claim.


Do not forget to mitigate the loss

If a tree has fallen through the roof, cover the furniture you can’t move, put a tarp over the hole, and/or call a disaster recovery service. These folks can make sure a bad event doesn’t get worse. In some cases they can even provide with an estimate of what it will take to get you back to where you were before the loss.

Do not file frequent, minor, or frivolous claims

Too many policyholders try to file claims on—what the insurance company can view it as—minor loss or damage. While they are obligated to pay your claim, they aren’t obligated to keep your premiums low or even keep you as an insured. Be wise when filing claims. If damage or loss on the medium-scale happens tomorrow, and something that is clearly bigger happens 9 months from now—and you claim both—be prepared to pay higher premiums.

Do not have low deductibles

Low deductibles often equal higher premiums, while high deductibles often mean you won’t be making insurance claims on minor loss or damage. This will save you money, and limit your risk of getting charged higher premiums for small claims and getting slapped with unexpected surcharges.

Do not inflate your loss

When your home gets robbed, do not “lose” your brand new 85-inch LED TV. In addition to claim frequency, companies also look at the amounts paid out. Insurance is there to bring you back to where you were before the loss. It is not supposed to be a money-making proposition. There is also this little thing called insurance fraud and it’s often found out, and it’s never fun be convicted of it.

Do not forget about alarm systems

This preventative measure is worth money to you in the form of discounts. A central station alarm in your home can be a 20% credit. Each company gives different discounts or credits, so talk with an agent about your options.

Jumping cartoon

Being able to file a home insurance claim is the reason why people have insurance in the first place, but it’s always important to keep in mind that premiums can increase, surcharges exist, and an insurance company can choose not to renew you as an insured. Don’t let a fear of increased premiums keep you from filing a claim, though. If you’re ever unsure, always talk to your independent agent—or start working with one—who can help you understand your policy, understand potential repercussions of filing a particular claim, and or help you get a new policy that will fit your needs a little better.

More expert advice about Home, Auto, and Theft Insurance

Photo Credits: #47640102 - Man Examining and Repairing Rotten Leaking House Roof © forestpath -; Check Man, Cross Man and Jump Man © ioannis kounadeas -

Charlie ScheinOwner & Principal Agent

Charlie has worked in the property/casualty insurance industry since 1988. He has owned his own independent agency since 2009. Star-Schein Agency offers insurance for Car, Home, Life, Health, Medicare Health, Business and Pet Health....

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