Navigating A Homeowner’s Insurance Claim

Navigating A Homeowner’s Insurance Claim

No one ever wants to file a homeowner’s insurance claim, but let’s face it, if something bad happens, you will need to.  We’re going to break down the process to make it a little easier to understand, and hopefully less painful to do.

A homeowner’s insurance policy pays for losses or damage to your property if something unexpected happens. Once the insurance company sends an adjuster and evaluates the damage to your home, they’ll pay a settlement amount in either replacement cost or actual cash value, depending on the coverage you have.

Replacement cost gives you funds to cover the costs to repair or rebuild your home using similar materials. Actual cash value gives you funds to repair or rebuild based on the current market value, taking age, condition and depreciation into consideration.

PRO TIP: Be sure to document everything in your house. Create an inventory. There are several great apps available to help with this. You’ll want to list items, including serial numbers where available, and either take pictures or a video.

Things to list in your inventory:

  • What the item is
  • When you purchased the item
  • How much you paid
  • How much you estimate a repair/replacement will cost 

If the pictures are on your phone, great, they will be stored “in the cloud” but if not, then perhaps download them on a flashdrive and store somewhere not in the house. If you haven’t already, start keeping receipts for anything that may need to be replaced- don’t forget cell phones, musical instruments, and appliances, as well as all the “normal” items. If you have time, try to keep track of replacement prices for all of these things on an ongoing basis.

Along with any insurance paperwork, keep all your documents related to the contents of your home and any work you’ve had done on it. Receipts go a long way in proving how valuable things are in your home.

When you do need to file a claim for damages or loss, your insurance company will appoint an adjuster to handle the claim, and that person will be your primary point of contact throughout the process. You'll want to detail the damage for them, answer any questions they have, provide documentation of expenses and update them on the status of repairs. You’ll need to be your own biggest advocate. Remember, their adjuster represents the insurance company's interests, not yours.

There are three kinds of adjusters:

A staff claims adjusters works for a single insurance company. When a claim is filed with that company, they send one of their staff adjusters out to investigate. You won’t have to pay a staff claims adjuster because they are paid by the insurance company.

An independent claims adjuster will often work for several insurance companies as a sort of third-party investigator. Like staff claims adjusters, independent claims adjusters work on behalf of insurance companies. But the key difference is that an independent claims adjuster is not a direct employee of an insurance company.

Finally, a public claims adjuster works for you — the policyholder. In the event of a major accident or natural disaster, it’s common for public adjusters to contact you. Since they don’t work for insurance companies, they’re more likely to have your best interest in mind. That said, public adjusters also charge a percentage of your settlement, usually between 5 and 20%.

There are times when it may NOT be in your best interest to file a claim. Some reasons are:

--The damage is minimal

Any claim, even a very minor one, may lead to an increase in your home insurance premium. Your insurer will likely deny any repair or replacement costs below your deductible. Claims that have repair costs only slightly higher than your deductible should probably be avoided as your insurer won’t cover much of the claim, and you risk a premium increase.

--Your policy excludes the damage

You don’t want to walk right into a problem by filing a claim which you are fairly certain will be denied. Even claims that are denied or have $0 paid out are reported to CLUE (Comprehensive Loss Underwriting Exchange) and therefore may have a negative impact upon the premiums you will pay in the future.

 An insurer may request a CLUE report when you apply for coverage or request a quote. The company uses your claims history, or the history of claims at a specific property, to decide if it'll offer you coverage and how much you'll pay.

Filing a homeowners insurance claim is not a “nothing to lose” proposition. Do your research on your policy exclusions, and where possible, consider getting the advice of an insurance agent before you file a questionable claim.

--The damage is from normal wear and tear

Homeowner insurance policies consistently include “failure to maintain” exclusions which give the carrier the right to deny the claim based upon negligence or lack of maintenance. For example, if you have a seriously damaged and leaking roof that resulted from your failure to replace shingles that led to the bigger problem, your carrier will likely deny your claim.

--You have several recent claims

Filing a series of claims within a relatively short time frame can significantly raise eyebrows with underwriters and lead to higher insurance rates or a policy nonrenewal. A homeowner with multiple claims on their record can cause carriers to assume that another claim will likely be filed. This is part of the risk assessment carriers use to determine if a policy should be renewed and whether the rate should change. Even denied claims can considered a negative factor when insurers determine you have an excessive level of claim activity.

Once Your Claim Has Been Approved

Your homeowner’s insurance company will likely pay your settlement with a check made out to both you and your mortgage servicer or lender. Most mortgage agreements require this to protect the lender’s interest. You probably will not get the entire amount up front, and your deductible be deducted from the proceeds.

If you have a mortgage, you will still be responsible for making your payments while your insurance claim is paid out

If you disagree with the settlement amount offered to you by the insurance company, you can escalate your claim. First ask to speak with the company’s claims department manager. "Be politely assertive" with the adjuster, says Amy Bach, executive director of United Policyholders, a nonprofit and advocate for people with insurance. "Don't come in with boxing gloves ready to fight.”

You can also check if your policy allows for independent appraisal after a loss. If so, inform your insurance company that you’re going to proceed with an appraiser. This is different from a public claims adjuster because an appraiser isn’t necessarily looking out for you. An appraiser is simply meant to be an impartial third-party that determines the value of your property or the costs for replacement or repair.

When you get an insurance appraiser involved, a third party (for example, a mediator) will ultimately have the binding decision when it comes to your claim. There’s a chance it won’t work out in your favor, but it might be worth it if you think the insurance company is shortchanging you with their offer.

And of course, you can also choose to get a public claims adjuster involved. If you’re unhappy with a settlement offer, a public claims adjuster can hold your hand through a dispute process against your insurer. They can also help you move forward with negotiations, supplemental claims and more.

Quite often your claim will involve your flooring. If we installed the floors for you, we have records of what you purchased. Otherwise, someone will need to determine what the floor is to determine the value. Many insurance companies use a service that analyzes a sample of the floor for assessment. FYI, sometimes their determination is not correct, or has not been adjusted for inflation.

If you are replacing flooring as part of an insurance claim, and you do not have information on what the floor is, expect to be asked a lot of questions by the estimator. We would love to tell you we can look at a carpet and tell you exactly what it is, but no one is that good!

Many providers, including Enhance Floors and More, charge for estimates that are for insurance companies as there are often additional steps that need to be followed (for example, negotiating with the adjuster) and writing the estimate in a very detailed and particular way for the insurance company. Your insurance company should reimburse you for any estimate fees you are charged.

We hope this never happens to you, but if it does, the more you know the easier you can navigate the process. Remember, the best time to prepare to file a claim is now!

Design Tip

We are all tired of the heat and humidity and are ready for fall, but we have a few more weeks of summer temperatures. Did you know that house plants not only make your house feel cooler, but they also actually help keep your house cool. Plants act as natural air conditioners and generate moisture into the atmosphere through a process known as transpiration.

The most heat-efficient plants are peace lilies and rubber plants as they work best in humid conditions.

Having a houseplant or two around will help keep your house cool in summer naturally. Just don't forget to water them - especially as the temperature creeps up outside.

I Was Floored By Enhance

Mary Alice in Marietta writes:

“Have had great experience and results using Enhance Floors. They have a remarkable team of professionals who work with you and each project is given personal and individual attention. I give them the full Five Stars!”

Thank you, Mary Alice. We looked at the records, and we first started working with you in 2005. We love long-term relationships with our clients! Enjoy your new floors.

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