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If your home has been damaged, you are likely wondering: how are homeowners insurance claims paid? If you have taken the critical step of purchasing home insurance and you have had an incident occur that has caused any issue, you want to be confident that your insurance policy does its job and protects you. Though the process may seem overwhelming and confusing, our experience can work to help explain the process to you.
The homeowners' insurance claim process is relatively straightforward. Once the damage has occurred or been discovered:
- Contact your insurance company and report the damage.
- The insurance company will schedule an appraisal or assessment.
- Be sure that you note all of the losses that have resulted from the incident.
- Schedule the repairs.
- Receive payment -- bear in mind that you may receive multiple payments and that the first payment check does not necessarily represent the complete total.
That is the homeowners' insurance claim process in a nutshell. However, there is a bit more to it than that. We've put this post together to give you a more concrete understanding of what happens during the claims process and what you can expect.
What Is the Home Insurance Claims Process?
If your home has suffered storm damage or has been adversely affected in some other way, it can be challenging to compose yourself and determine what to do next. It is essential to act quickly for many reasons. First, the sooner you begin the process, the faster things can return to normal. Second, the earlier you act, the more likely it is that you will be able to accurately recall and describe precisely what happened.
Contact Your Insurance Company and Report the Damage
This is the first step in the process. To get the ball rolling, you have to reach out to the insurance company. After all, they cannot help you handle a claim if they do not know that there is a claim in the first place. When we had a home inspection, we discovered mold in the crawl space. After trying to determine who might be able to assist us, we reached out to our insurance company to let them know what was happening and that we needed help.
The Insurance Company Will Schedule an Appraisal or Assessment
Once you reach out to your insurance company, they will send an adjuster to evaluate your home and the damage. He or she has been trained to document every aspect of an incident, determine what is related to the incident, and detail what your policy will cover. This is a critical step and should not be skipped.
When our mold was discovered, we initially believed that our policy would potentially cover only mold removal and remediation. However, during the assessment, our adjuster found that the toilet in the master bathroom was leaking through the flooring. The moisture from the leak had led to the formation of mold. The toilet had to be removed, and the flooring in the bathroom had to be replaced. Had we handled the mold removal ourselves and not contacted the insurance company, it is possible that it would not only have cost us more than our deductible but that we would not have solved the problem.
Document Any Losses That Have Resulted From the Incident
In addition to the incident itself, be sure to document any additional damage that has occurred. For example, if a tree fell on your home and items inside the house were destroyed or ruined, as a result, write them down. If your television was crushed or your couch was mangled when the tree fell, make a note. This information will be useful to the insurance company and could save you money if you do not have to pay out of pocket to replace the items yourself.
Schedule the Repairs
Once the adjuster has completed the assessment and filed their report with the insurance company, the insurer will contact you. They will work with you to schedule a time for the repairs to begin. This part is important as the repairs make it possible for things to get back to normal. The sooner the work begins, the faster it can be finished.
There are a few different ways that the insurance company can choose to handle this part of the process. They may decide to send you checks in installments. They pay for each step of the repair process. This was the case in our situation. The insurance company paid as portions of the work were completed. First, they sent a check for mold removal and remediation. Then, they sent us a check once the bathroom floor was replaced. Finally, we received a check to pay for the plumbing work that was done to install the new toilet.
Sometimes, the insurance company may decide to pay you at the end of all of the repair work. They may also choose to pay the contractor(s) directly. So, rather than you paying the contractor(s) out of pocket and then being reimbursed, your insurer may eliminate the middle man, so to speak, and handle the payment process for you.
No matter how the process works, it is essential to communicate with your claims specialist throughout the process. You'll want to keep them apprised of the work and how it's going. You'll also want to make sure that the payments you receive are for the correct amounts and that you, the insurance company, and the contractors are all on the same page.
How Long Does a Home Insurance Claim Take?
One of the biggest questions that anyone wants to know is how long it will take for the process to happen. Unfortunately, there is no definitive answer to this question. Several variables can affect the length of time the claim will take to complete.
These factors include, but are not limited to: the extent of damage, how long it takes to coordinate the adjuster's visit to your property, availability of contractors, how communicative you are, how responsive your claim representative is, and more. In our case, from the initial call to the insurance company to the completion and final payout, roughly one month elapsed. That month included constant communication, nearly immediate availability from contractors and excellent communication with and from our claim representative.
Does Home Insurance Go Up If You File a Claim?
Many people also wonder if filing a claim will harm their insurance rates. The truth is that claims do not automatically cause your rates to increase. We had the same concern when filing our claim. After all, doesn't it seem like the insurance company might decide that they need to raise your rate to recoup the money they spent on you?
However, our rates did not change at all when we filed the claim or received our payment. And, in truth, the overall experience was as positive as it could have possibly been. Thanks to the way our insurer handled the situation, our family has all but declared that we would remain with our current provider for as long as possible.
How Does a Deductible Work on Home Insurance?
The final thing to understand about the home insurance claim process is the way the responsibility of costs is divided between you and the insurer. Put, the homeowner must pay their deductible amount. The insurance company then pays the remainder. So, if your deductible is $500, you must pay for the first $500 worth of damage. Your home insurance company pays anything above that amount. So, if your damage is assessed at $8,000, you will pay $500, and the insurance company will pay $7,500. This saves you a significant amount of money and prevents you from being forced to pay more than you may be able to afford.
Ultimately, homeowners' insurance claims are well worth the amount of time they take to file. The sooner you act, and the more ownership of the situation you choose, the better the chance that you will have a positive outcome. Each insurer is different, and every policy is unique. You must familiarize yourself with your policy and adhere to the claims process as closely as possible. Though you might think you're saving yourself money by foregoing home insurance, you might be sorely mistaken should damage occur. You can read more about the importance of home insurance in our post, "Can You Go Without Home Insurance?" And, if you have damage that has resulted from poor construction, you can read our post "Does Homeowners Insurance Cover Construction Defects?" to find out if you are protected through your policy.
No one wants to have to file a home insurance claim. However, if you find yourself in that situation, we hope this post has helped you better understand the process.