How Do Home Insurance Claims Work?

Filing a home insurance claim can be stressful. As a policyholder, you can reduce some of that stress by better understanding how home insurance claims work. Here’s what you need to know to make your claims process go as smoothly as possible.

What is a home insurance claim?

A home insurance claim is a formal process where you notify your insurance company about an event that caused damage to your home or personal property. Basically, you are asking the insurance company to reimburse you for the cost to repair the damage.

For your homeowners insurance company to consider your claim, the damage or loss must be caused by something that your policy covers. These causes are known as covered events or perils. For example, you might file a home insurance claim if your roof is damaged by a fallen tree, or if your laptop is stolen.

Covered perils

Your homeowners insurance company will only pay to repair or replace the damage if it occurred because of a problem covered by the policy. These causes are sometimes known as named perils. Here are the perils that are typically covered by a standard home insurance policy:

Step-by-step guide to home insurance claims

If your home or belongings are damaged by a covered event—such as fire, wind or theft—you may want to file a homeowners claim. The first thing you should do, of course, is make sure that everyone is safe. After that, you should take the following steps:

Steps your insurance company will take

After you file your claim, your home insurance company will assign a claims representative to your case. The representative will contact you in order to:

• Gather more information about the claim
• Explain your coverages
• Answer any questions you have
• Schedule an appointment to inspect your damage (if necessary)
• Help you select a contractor to make urgent repairs to your home (if necessary)

After the damage has been fully assessed, your claims representative may send you a repair estimate based on acceptable repair methods. If your claim is covered, your insurance company could pay to repair or replace your damaged property.

How insurance companies pay out claims

Here are some common questions regarding home claim payments:

How long does it take to settle a home insurance claim?

A claim settlement can take a couple of days or several months, depending on the severity of your claim and state regulations, among other factors. Generally speaking, the more complex the homeowners claim, the longer it takes to settle.

How will I receive my claim payment?

Insurance companies typically pay claims by direct deposit, electronic check or printed check. The exact payment process and the amount you receive will depend on several factors, including your homeowners insurance policy, the claim type, your deductible amount, the state you live in, and whether or not you have a mortgage.

Do deductibles apply to every claim?

A deductible is the amount you must pay out-of-pocket before your insurance kicks in. Generally speaking, a deductible will apply to home insurance claims if they are made under your dwelling, personal property or other structures coverage. Other types of coverage may not have deductibles, like personal liability coverage.

Remember, if the cost to repair the damage is less than your deductible, you may not want to file a homeowners claim. Check your policy to find out your deductible amount.

Will I receive one payment check or multiple checks?

Depending on the nature and severity of the damage, it is entirely possible that you could receive multiple checks. Let’s say a fire damages both the structure of your home and your personal belongings. In this case, you may receive two separate checks from your insurance company, one for each category of damage.

Additionally, if you’re unable to live in your home while it is being repaired, you may receive a third check—this one for the expenses you incur during this period of time, such as temporary housing and meals. These additional living expenses are covered by your policy’s loss of use coverage.

Will my payment amount reflect the actual cash value or replacement cost value of my property?

How much an insurance company pays out depends on whether your policy provides for actual cash value (ACV) or replacement cost value (RCV). Check with your insurer to understand the limits of your homeowners coverage.

• Actual cash value – Pays you what the item is worth at the time of the loss. This amount factors in depreciation due to age and wear and tear.
• Replacement cost value – Pays you to replace the item with a new, similar item at today’s market prices. It does not factor in depreciation.

Home insurance claim tips

Here are some things you can do to speed up the home claim process:

Review your coverage

Take a few minutes to review your home insurance coverage. A good place to start is your policy’s declarations page. This will help you understand if the damage to your home or personal items is covered by your home policy. While you’re at it, be sure to review your coverage limits, deductible amounts and other important information.

File your claim right away

It’s important to file your home insurance claim as soon as possible. In fact, most insurance policies require that you report claims within a certain time frame.

Save all documentation

When in doubt, document it! This means taking clear photos and videos of the damage to your home and personal items, asking for estimates and receipts from contractors, and jotting down serial numbers of valuables. Detailed documentation like this will make your insurance adjuster’s job much easier—and speed up your claim as a result.

Communicate with your insurance company

Your insurance company wants to work with you during this difficult time. Help them help you by staying in touch throughout the claim process. Follow up on correspondences in a timely manner and don’t be afraid to ask questions.