Having homeowners insurance is one thing. Knowing how to make claims for your insurance is another thing. Working with professionals and doing the right documentation is not enough. You need to familiarise yourself with homeowners insurance claims in the United States and what the process entails.
Although it may sound easy, it is usually not always as straightforward. So, arming yourself with the right information and property insurance tips will help you navigate the process when a need arises. Keep reading to learn all you need to know.
Understanding Homeowners Insurance
Homeowners insurance is a type of property insurance that provides coverage for your home and its contents. It offers financial and home protection against various risks and mishaps. Note that homeowners insurance is specifically for property owners. If you live in a rented apartment, you would typically need renters insurance.
What Does Homeowners Insurance Cover?
The coverage for this insurance can vary depending on the insurer. However, some of the coverages you may get include:
- Dwelling Coverage: Protects the structure of the home, including the foundation, walls, roof, and built-in appliances, in case of damage from covered perils like fire, windstorms, or vandalism.
- Personal Property Coverage: Covers personal belongings inside the home, such as furniture, clothing, and electronics, in case of covered events like theft or damage.
- Liability Coverage: Offers protection if someone is injured on the property, and the homeowner is found responsible. It may also cover damage caused by the policyholder or their family members to others’ property.
- Additional Living Expenses (ALE) or Loss of Use: Covers additional costs if the home becomes uninhabitable due to a covered event, such as temporary accommodation or increased living expenses.
- Other Structures Coverage: Insures structures on the property that are not part of the main dwelling, like detached garages or sheds.
- Medical Payments to Others: Unlike health insurance that covers only registered family members, this one covers medical expenses if someone is injured on the homeowner’s property, regardless of fault.
What Are Homeowners Insurance Claims?
Homeowners insurance claims in the United States is the formal request you make to your insurance company to seek financial compensation for damage or loss to your residential property or its contents. Usually, you can start this process when an unexpected event, such as a natural disaster, fire, theft, or other covered mishaps, results in harm to the insured property.
When you are about to purchase a homeowners insurance plan, be meticulous with documentation, and get a thorough understanding of the insurance policy. This will be essential for a smooth and successful homeowners insurance claim experience. Otherwise, disputes may arise between you and your insurer when you have need for a claim.
The Most Common Homeowners Insurance Claims in the United States
Insurance Information Institute released statistics on the cause of losses to homeowners and the percentage of losses incurred between 2017 and 2021. These causes are listed below from the most to the least common cause.
1. Wind and Hail
Between 2017 and 2021, wind and hail resulted in 48.0%, 39.5%, 38.3%, 47.8%, and 39.4% with an average claim severity of $12,913. Claims related to wind and hail damage are particularly common in regions prone to severe weather such as hurricanes, tornadoes, and thunderstorms.
2. Water Damage and Freezing
Water damage and freezing loss was 18.0% in 2017. It rose consistently in 2018 and 2019 to 24.5% and 29.0% respectively. By 2020, it dropped to 19.9%, but it rose again to 23.5% by 2021. Within this period, water damage and freezing had an average claim severity of $12,514. The figures make it one of the most common homeowners insurance claims in the United States. Typically, water damage includes; burst pipes, plumbing leaks, appliance malfunctions, and roof leaks.
3. Fire and Lightning
From 2017 to 2019, losses to fire and lightning dropped from 26.2% to 26.0% and to 21.5%. It increased slightly to 21.9% in 2020 and to 24.8% in 2021. Although it is not the most reported claim, it has the most expensive cost with an average claim severity of $83,519. This is so because fire, whether caused by electrical issues, cooking accidents, or other reasons, can lead to significant property damage.
4. All Other Property Damage
This includes impact damage from fallen trees, vehicles, etc, among other miscellaneous damages. This damage had a percentage loss of 4.6% in 2017. It continued to increase over the years with incurred losses of 6.5%, 7.1%, 7.4%, and 9.4% in 2018, 2019, 2020, and 2021 respectively. The average severity claim within these years was 7,460.
5. Bodily Injury and Property Damage to Others
This is one of the liability homeowners insurance claims in the United States. It happens when someone gets injured or their property gets damaged on your property. Thankfully, this is not a very common claim. However, it costs a lot with an average severity claim of $31,663. The percentage losses incurred between 2017 and 2021 fluctuated as follows; 2.2%, 2.3%, 2.8%, 2.1%, and 1.8%.
6. Theft and Burglary
Theft is the sixth most common claim with a 1.0% incurred loss from 2017 to 2019. By 2020, it dropped to 0.6% and increased slightly to 0.7% by 2021. also, it is the cheapest of the listed claims, costing an average of $4,646.
7. Medical Payments and Other
Payments for medical care and other unspecified claims resulted in percentage losses of 0.1%, 0.2%, 0.4%, 0.4%, and 0.5% from 2017 to 2021. Nonetheless, it has an average cost of $10,179, making it the fifth most expensive of the claims.
How To File Homeowners Insurance Claims in the United States
If you incur any damage to your home, the first thing to do when filing homeowners insurance claims in the United States may not be to call your insurance company. There are a few things you may have to do first as discussed in this claim process guide. However, throughout the process, clear communication with your insurance company, thorough documentation, and a good understanding of your insurance policy are crucial for a smooth and successful homeowners insurance claim experience.
Contact Emergency Services (if needed)
In the event of an emergency, such as a fire or injury, prioritize the safety of yourself and others. Call emergency services (911) if necessary and take steps to ensure everyone is out of harm’s way.
Document the Damage
Before making any repairs, document the damage thoroughly. Take photos and videos from multiple angles to provide clear evidence for the insurance claim. This documentation is crucial for the claims process.
Review Your Policy
Familiarize yourself with your insurance policy to understand the coverage limits, deductibles, exclusions and other insurance coverage details. Knowing what your policy covers is essential for managing expectations during the claims process.
Contact Your Insurance Company
Notify your insurance company as soon as possible. Most insurance companies have a claims hotline that operates 24/7. Provide basic information about the incident, including when and where it occurred. Prepare to provide detailed information about the incident, including the cause of the damage, the date and time it occurred, and a description of the damages. The more information you provide, the smoother the claims process will be.
Temporary Repairs (if necessary)
If immediate action is needed to prevent further damage (e.g., covering a leaky roof), take reasonable measures before filing homeowners insurance claims in the United States. Also, keep all receipts and documentation for these temporary repairs, as they may be covered by your insurance policy.
Claim Assignment and Adjuster Visit
The insurance company will assign a claims adjuster to assess the damage. The adjuster will contact you to schedule a visit to inspect the property. Be prepared to provide the adjuster with access to the damaged areas and any relevant documentation. The claims adjuster will evaluate the extent of the damage, determine the cause, and estimate the cost of repairs or replacement. They will compile a detailed report that will influence the insurance company’s settlement offer.
The insurance company will provide a settlement offer based on the adjuster’s report and your policy coverage. This offer may cover the cost of repairs or replacement, subject to your deductible. Once you accept the settlement, the insurance company will issue a payment. This payment may go directly to you or, in some cases, to the contractors providing repair or replacement services.
Appealing a Decision (if necessary)
If you disagree with the settlement offer, your insurance policy may include a process for appealing the decision. Review your policy or contact your insurance company for guidance on the appeals process.
Mistakes To Avoid in Filing Homeowners Insurance Claims in the United States
Delaying the Notification
Promptly report the incident to your insurance company. Delays in reporting can lead to complications in the claims process, and some policies have specific timeframes for reporting incidents.
When filing homeowners insurance claims in the United States, thoroughly document the damage with photos and videos before making any repairs. This evidence is crucial for supporting your claim and can expedite the assessment process.
Making Permanent Repairs Too Soon
While you may need to take temporary measures to prevent further damage, avoid making permanent repairs before the insurance company has assessed the situation. Consult with the claims adjuster before undertaking major repairs.
Not Understanding Policy Coverage
Familiarize yourself with your insurance policy, including coverage limits, deductibles, and exclusions. Failure to understand your policy may result in unrealistic expectations or missed opportunities for coverage.
Underestimating the Damage
Ensure the claims adjuster has a comprehensive understanding of the extent of the damage. Underestimating the damage initially may result in inadequate compensation for repairs or replacement.
Not Communicating Changes
Keep your insurance company informed of any changes in circumstances. If the situation evolves or additional damage is discovered after the initial assessment, communicate these changes promptly.
Assuming Everything Is Covered
Don’t assume that all damages are covered. Certain perils, such as floods or earthquakes, may require separate insurance policies. Review your policy and, if necessary, consider additional coverage for specific risks.
Not Seeking Multiple Estimates
If repairs are required, obtain multiple estimates from reputable contractors. This can help ensure that the settlement offer aligns with the actual cost of repairs.
Overlooking Additional Living Expenses
If your home is uninhabitable and you need to find temporary accommodation, be sure to keep records of your additional living expenses. These may be covered by your homeowners insurance policy.
Accepting an Unfair Settlement
Review the settlement offer carefully. If you believe it is inadequate or unfair, don’t hesitate to discuss the matter with your insurance company. Some policies include an appeals process.
A comprehensive understanding of homeowners insurance claims in the United States is indispensable if you are looking to fortify your resilience against the uncertainties of life. From the initial reporting of incidents to the careful documentation of damages, each step in the claims process plays a pivotal role in securing a fair and timely settlement. It is also important to be well-versed in policy details to avoid the common pitfalls discussed here.