Most homeowners insurance claims can be the most stressful experience for you.
Before you make a claim it is very important you have a good agent to talk to before you contact the insurance company.
One of the most difficult concepts for homeowners to understand is that a homeowners insurance policy is not a warranty policy.
If you believe
“Something breaks or gets damaged, I will just make a claim.”
If you file a claim you will experience either a rate increase or a non renewal.
Do all homeowners insurance claims cause my premium to increase?
Let us start with a list of some claims that will count against you
- Inattentive child/parent filling up the bathtub and forgets the water is running…..
- Hose that is connected to the ice machine on the refrigerator is no longer connected and water damages the floor
- New Years Eve party and your wife’s friend falls down the stairs.
- Frying a Turkey under the carport and part of the house catches fire
Now here are some claim scenarios that will not count against you
- Hurricane damages your roof and as a result water intrusion damages your furniture
- Hail storm heavily damages your roof and you need a roof replaced
- Neighbors’ tree falls on your house during a recent thunderstorm (you think your neighbors insurance will pay but they will not. Its on you)
- Lightning strikes your house and destroys your air conditioning unit and your new 60″ Flat Panel TV.
Here is a tip before you decide to just turn in your next property damage claim (never hesitate to turn in Liability claims)
- Get an estimate for the damage.
- Deduct your deductible from the estimate.
- Determine if the amount you are going to receive after your deductible is greater than an amount you are comfortable with paying out of pocket.
“Why should I pay any claim out pocket? That is why I pay high homeowners insurance rates in New Orleans.”
This is true but if it is a claim that will count against you, the claim
- will stay on your record for 5 years
- will affect your insurability if you want to move to a new company
- will cause your policy to go up at renewal
- could generate a non-renewal if a claim is made during the first year of the policy
What if I make a claim but I didn’t get paid because the damages were under my deductible?
If it is a non-weather related claim, regardless of payout, the claim will remain on your claim record for 5 years.
So if you find some personal items missing after a party and want to make a claim, you submit your list of items that are missing but the amount is only a few hundred dollars above your deductible. You decide the claim is not worth it so you tell the insurance company to withdraw the claim.
Tip: (Some home insurance companies do not cover “mysterious disappearance” of personal property. It may be offered as an additional endorsement)
The Theft claim will count on your claim record for the next 5 years as
CWP– Closed Without Payment
This is why it is important to get an estimate and deduct your deductible before you make a property damage claim.
All Homeowners Insurance Companies will surcharge your home insurance premium for a Theft Loss.
The majority of homeowners insurance companies also submit your claim history record to a central database where other insurance companies can share the information to properly underwrite a new risk based on your claims history. A CLUE report will list your claims history and if you decide to move your insurance to a new homeowners insurance company, the new company can view a copy of the CLUE report.
What’s this all about?
Go ahead and take care of the small stuff.
I remember my grandfather telling me about a time when he had a homeowners insurance policy with a “$100 deductible for all claims”.
Those times are gone or maybe they still exist in Montana or South Dakota but in New Orleans, you should consider a deductible no less than $1000. I have a $2500 deductible.
A $2500 deductible
- Forces you to take care of the small stuff
- Creates a premium savings of up to $250 or more a year
Take a higher deductible to a level you are financially comfortable with to keep your premium down.
When you take a higher deductible you keep more of your money in your pocket instead of giving it to the insurance company’s investment portfolio.
So if you are someone that does not make non-weather related claims, taking a higher all other perils deductible (non-hurricane) makes financial sense.
If you believe a home insurance policy is a maintenance warranty type policy, take a low deductible and be prepared for rate increases and a rocky road ahead that eventually leads to the Louisiana Fair Plan.
My name is Tim D’Angelo and I’m the owner of FM Agency Group.
We are a Louisiana Local Independent Insurance Agency located in the New Orleans area.
We pride ourselves on delivering flexible customized Homeowners Insurance Quote Proposals based on the coverage YOU want not what the Insurance company wants to give you.
WE MAKE IT EASY TO CONTACT US
Call us at 504.348.3131
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