Navigating the Homeowners Insurance Claim Process
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UPDATED: Nov 20, 2020
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If a serious disaster strikes your home - such as a fire, a tornado, a hailstorm, or a robbery - it can be hard to deal with the aftermath on a personal level. But the challenges don't stop there. Filing a claim and trying to get your insurance company to pay out can be a difficult, tedious, and time-consuming process. But to make everything happen more smoothly, you can educate yourself on the finer points of filing your claim, the red tape, and how best to make sure you are paid what you are fairly owed.
Prepare Your Evidence
In order to get your claim honored, you're going to have to prove your case to your insurance company. Obviously, you can't exactly prove a case based on hearsay (despite what the Law & Order TV franchise would have us believe). You need hard evidence to prove that the damage happened, to show what was damaged, and to prove how much the damages will cost you. So you will want to collect the following:
- Photographs of the damaged property
- Receipts for belongings that were destroyed (especially if they were expensive)
- Quotes from reputable contractors or vendors for repairs/replacements
It's important to collect as much of this information as you can before you get your insurance company involved. On the other hand, though, you shouldn't use it as an excuse to put off filing your claim. Taking too long to file can also decrease the likelihood that you will receive a fair amount for your damages - or receive any compensation at all.
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Stay Proactive and Stay Involved
Once you've gathered your evidence and contacted your insurance provider, be prepared to fight for every red cent your insurance company owes you. Unfortunately, the legal system tends to favor your insurance company more than they favor you, the homeowner. So you have to stay on top of them, you have to stay on top of your home, and you have to be as involved as possible with the claims process if you want to be sufficiently reimbursed.
If the damages aren't severe enough to force you out of your home, then do what you can to keep the current damages from getting worse. Make sure you cover up broken areas (such as windows or your roof) with sturdy materials. If you aren't sure how to contain the damage, consult a contractor for advice. And if the damage is so severe that your house is unlivable, be sure to keep receipts and document all expenses associated with your alternative living situation. Most homeowners insurance policies will reimburse you for such costs.
In order to get an accurate assessment of the damages and repair/replacement costs, you're going to have a lot of strangers stomping around your property performing inspections. These will include your insurance claim adjuster(s), contractors, and possibly even representatives from your mortgage lender. It's best if you are physically present for each inspection, keep an open dialogue with each inspector, and get personal copies of any documentation for yourself. As we've discussed already, the more evidence you have, the better.
Prepare for An Extra Battle With Your Mortgage Company
So you've settled with your insurance company and they've agreed to pay $40,000 to replace your roof, which was damaged by a severe hailstorm. But as you're starting to make arrangements to have your roof replaced, you come to find out that your mortgage lender is holding 75% of your claim award in their bank and won't release the funds until you cut through their red tape. What gives?
Unfortunately, they are legally allowed to get away with this because, until you finish paying off your mortgage, the home still technically belongs to them also. And they have a vested interest in making sure that you only spend the money on the repairs your home needs. Try your best to fulfill any requests they may have in a timely manner. And if you're still having difficulty - whether it's with your lender, your insurance company, or both - consider hiring yourself a lawyer. It can be difficult to sort out what your legal rights are and how to get your rightful claim honored without the help of someone who knows the law.
Be Prepared for Higher Premiums
Even if the damage was not your fault, even if you took every proper precaution before the peril took place, and even if you do everything right during the claims process, you should still expect to see your homeowners insurance provider raise your annual premium the next time your policy is up for review. This could be the result of either losing your "zero claims" discount, or simply a consequence of your perceived risk becoming elevated in the eyes of your provider.
In rare cases, your coverage may be cancelled or considered "nonrenewable". If you feel this is in error, then you should contact your insurance company as soon as possible. They are legally required to give you plenty of notice, and a legitimate reason for why your coverage is ending. And just like we said earlier, if you feel their decision has been made unfairly, you should probably get some legal advice on the matter.