- Damage to your home or property must be caused by an insurance risk to be considered a valid claim.
- Your deductible and the limits of your policy have an impact on the amount of your reimbursement.
- Payment can be sent to you, your lender, or a contractor depending on the claim.
- Check out the insider’s guide to the best home insurance companies.
Home insurance protects your home and personal effects, and provides liability coverage for injuries that occur on your property. It can also provide additional living expenses if you need to move temporarily.
Renters’ insurance has personal property coverage if your property is damaged and liability coverage if someone is injured in your rental. It also offers “loss of use” coverage if your rental becomes unliveable due to damage.
Unfortunately, most landlords and renters don’t understand what constitutes a valid claim until after they’ve suffered a loss. It’s worth taking the time to understand how insurance claims work so you won’t be surprised with your payment in the future.
What Constitutes a Loss of Home or Tenant Insurance Claim?
For your loss to be covered by home or tenant insurance, the damage or loss must be due to an insurance risk. A peril is an event that can damage your home or property, such as theft, fire, or storm.
The type of risk protection you have depends on home insurance depending on your type of housing: condo, home, mobile home, tenant, townhouse, or new construction.
There are eight types of home insurance policies depending on the type of home you own. However, they fall into two categories: named perils and (all) open perils.
Most policies are covered against named perils, which means you are only covered for listed events. Open risk coverage includes the named risks and is more extensive, covering everything that is not specifically excluded in the policy.
* HO-5 policies are open risk. For HO-3 and HO-7 policies, the open risk applies only to residential coverage.
Source: Data from Zebra and Lemonade
Earthquakes, floods, government foreclosures, mudslides, ordinance updates, sewer backups and sinkholes are not covered by homeowners or renters insurance and require additional endorsements. or separate coverage.
In addition, damage due to neglect or improper maintenance is generally not covered. Consider a residential warranty for regular repairs to equipment or appliances.
Understand the limits and deductibles of your policy
Homeowners are responsible for repairs, maintenance and damage to their home and its structure. Home insurance protects the house and structures as part of home coverage.
Because the tenants do not own the property, the owner is responsible for the building and the common areas. So unlike landlords, renters insurance does not include housing coverage, but it does have personal property coverage for their property and liability coverage for injuries that occur in their rental.
Your deductible is subtracted every time you make a claim. If you have a dollar amount for your deductible, it will be deducted from your claim. For example, your house is damaged by a storm and the insurance company calculates your loss at $ 15,000 to repair the damage. If your deductible is $ 500, the insurance company will pay you $ 14,500.
If your deductible is a percentage, like 2%, then that amount would be deducted from your claim. If your home was insured for $ 500,000 with a 2% deductible, you would have deducted $ 10,000 from each Claim. For example, if you have a loss of $ 15,000, the insurance company will deduct $ 10,000 from your loss and pay you $ 5,000.
*You can increase this amount or purchase an umbrella policy for additional coverage
** You can get an endorsement for coverage of specialty items like jewelry and fine art
How to file a complaint
- Contact the insurance company to file a claim as soon as possible.
- For homeowners, if your home is damaged, your operator can provide a list of contractors and offer advice on DIY tips to prevent further damage. Tenants notify your landlord or building management of the damage so they can fix it.
- If you think your accommodation is habitable, contact your operator before leave your home. Do not assume that “loss of use” or “additional living costs” will apply until you have discussed this with your carrier.
- In case of theft or loss, you must file a police report as some carriers will require it. If you have separate jewelry insurance and your jewelry is stolen or lost, you will also need to contact this carrier.
- Take photos of the damage before disposal and cleaning.
- Beware of price gouging contractors and door-to-door scammers. Ask contractors for their license and insurance credentials to avoid fraud. If you are a tenant, your landlord is responsible for the building and the structure.
- Prevent further damage to your property.
- Don’t do something that you are not comfortable with / that does not seem safe. Home insurance has a condition to avoid further losses. Focus on a temporary solution rather than a long term solution so that your insurance company can properly access a permanent solution professionally. Tenants should ask the landlord or property management to take care of the repairs.
- If the damage is caused by a flood or earthquake, contact your insurance provider for this coverage.
You can call the claim number on your policy or make a claim online on your carrier’s website. Many carriers have digital claims filing applications where you can upload photos of the damage for faster processing. You must file your claim in a timely manner or your claim may be denied.
The Insurance Information Institute said most companies require you to file a claim within a year of your damage. Check with your carrier for the deadlines for filing a claim.
Personal property can be replacement cost or actual cash value
Homeowner and tenant insurance policies generally use “replacement cost” when paying for covered damage. Replacement cost is the cost of replacing the item with a new or used product.
The actual cash surrender value (ACV) takes into account the depreciation of the item. For example, if a five-year-old leather sofa is damaged by fire, the actual dollar value takes into account the age of the sofa. The actual cash surrender value is usually less than the replacement value.
Flood insurance policies generally use the actual cash value, but you can pay extra to use the replacement cost. Check with your home insurance what is used. Some suppliers offer a “guaranteed replacement cost” as a benefit.
For specialty jewelry and fine art, you will be covered for appraised value less any deductible.
It is a good idea to take an inventory of your furniture and personal effects. Some home insurance companies will have inventory lists to fill out. If you have riders for fine art and specialty jewelry, you will need to catalog them and provide ratings for them.
You can receive multiple checks
While your claim is being processed, your initial check may be part of the insurance companies’ estimated loss. The Insurance Information Institute has stated that “even if you have a replacement value policy, the first check you receive from your insurer will be based on the cash value of the items.”
This is because to receive the replacement value, you must actually replace the items and show the receipts as proof of replacement. Once you submit the receipts to show the replacement, you will receive another check for the difference.
If you suffer a total loss, when your home or property is damaged beyond repair, your insurance company will usually pay the policy limits.
Additionally, if you filed a claim for additional living expenses or loss of use because you had to move, you may receive a separate check.
Remember that flood and earthquake insurance is separate coverage, so if you file a claim with them, separate checks will be done.
Payment can go directly to your contractor or mortgage lender
If you have a mortgage, your lender will require home insurance and may be listed as an additional insured or an interested party to protect their investment in the loan. Therefore, your repair check can be drawn up in your name. and your lender. It is in your lender’s best interest to ensure that the repairs are carried out correctly.
The Insurance Information Institute said that “lenders can put the money in an escrow account and pay for repairs as the work is completed …[and] may want to inspect finished work before releasing funds for payment to the contractor.
If you don’t have a mortgage, some contractors who repair your home from an approved claim may ask you to sign a “payment instruction”. This means that instead of the insurance company sending you the payment, they send the payment directly to your contractor. If you agree to have payments sent directly to your contractor, you must notify the insurance company if the contractor has not completed the work before issuing the final payment.
Different home insurance companies have different policies. Talk to your agent to find out how claims are handled when you have a lender or the contractor wants direct payment.