Homeowner claim considerations
Have you had a big – or little – mishap at your house? If so, thought should be put into whether or not a claim should be filed with your insurance company. The decision can be very important. Ultimately, it could have a dramatic impact on the cost of your insurance premiums.
So, do you file a claim or pay out of pocket? The answer may seem fairly straightforward if you have the luxury of a large savings account to minimize insurance claim activity. However, you pay for insurance for a reason. And, there will be times when it makes sense to call your agent and file a claim.
Consider the following…
A problematic roof
Are you inside your house and happen to look up and realize your worst fear – a water stain on the ceiling. In the vast majority of cases, it best to pay for the repairs out of pocket considering the fact that roofs are seldom explicitly covered in common homeowner insurance policies. If you decide to file a claim, make sure the time and effort is worth the potentially protracted discussion with your insurance carrier. The damage from the leak will most likely be covered, but not the source of the leak per se. Do your homework and pay to consult with an expert if you must before a small problem turns into a very large and costly repair.
Water line problems
Are you in a home that is built on a subfloor or are the pipes older and not so well insulated? If proactive, preventative measures did not help avoid the problem and you find yourself with a costly mess, it may be best to file a claim – especially if you do not have much idea of the extent of damage or the eventual total cost. Of course the opposite is true if the break / leak is in a relatively safe place readily accessible and you know how to fix the issue or you happen to be friends with a plumber (though that is probably wishful thinking).
A fire damaging the house
Fires are obviously one of the worst things that can happen to a house. Ironically, actual fire damage is usually far less severe than the amount of damage and loss caused by accompanying smoke. In any case, fire and/or smoke damage to a structure can become a drawn out repair or replace proposition. If the insurance company gets involved (also known as when you file a claim), a full investigation and fault determination and ensuing authorized repairs will take a substantial amount of time. Of course, if the cause is obvious the process may be quite straightforward. But, beware. If a claim is filed and liability is found as a result of negligence by the homeowner, the insurance company may in fact refuse to pay (on valid grounds). Therefore, if there is any question of cause, make sure to do your due diligence before filing a claim with the insurance company.
Floods and earthquakes
If Mother Nature ever extends her fury to your property, the resulting damage could be extensive. In such high cost events, the need to file an insurance claim will indeed be necessary to avoid a true financial catastrophe. Similar to fires in many cases, natural disasters will require an extensive investigation and rebuilding process. However, if Mother Nature only hits you with a “glancing blow,” then perhaps paying out of pocket is more apt, especially when the actual damage is relatively minor and your insurance policy includes a high deductible for comprehensive loss.
Slips, trips and falls on your property
Without simplifying matters too much, in the vast majority of cases it makes sense to offer to take care of the issue out of pocket. That is, unless, the situation gets serious and the visiting parties who were hurt threaten litigation. Of course, that would be the worst-case scenario. We all know stranger things have happened with “former friends.” Ultimately, it is in your best interest to be proactive and act strategically in your best interest. If you feel as though the issue will not be resolved informally in a timely manner, then filing a claim may provide a safeguard and become the optimal way to protect yourself from potentially costly and protracted litigation.