The decision to file a homeowner’s insurance claim should be taken seriously. Insurance companies track and share your claims history using the Comprehensive Loss Underwriting Exchange, or CLUE. A history of frequent claims can cause an insurance company to cancel your policy or raise your rates. Just an inquiry to your insurance company’s claims department can trigger an entry on your CLUE report, even if you don’t file a claim.
So how do you know if you should file a claim or not?
Add up your damage. Don’t underestimate either. Believe it or not, most people underestimate the cost to repair property damage. Here’s why –
Water damage is often hidden, it usually comes from inside walls, behind refrigerators, under dishwashers, behind washing machines, etc. It is hidden. By the time that puddle from your icemaker line makes it to the front of the refrigerator it has gone behind your cabinets, under walls, into your crawl space, and under your kitchen floor. First glance looks like a puddle, but a serious inspection will often show that you have moisture 20 feet or more from the source of the leak. That moisture will cause mold and rot, swelling and deterioration, and all kinds of problems if it isn’t treated quickly. There is a reason that the average water claim is $8000.00.
Water needs to be dried before repairs can be made. Prompt and thorough drying prevents problems later, minimizes health risks(more info), and costs a lot of money – even if you do it yourself. Before any repairs are even started plan on at least $1000 to dry your structure.
You can usually see fire damage, but smoke goes everywhere and gets on everything. Your nose gets desensitized to smoke odor very quickly, so you won’t smell smoke in the rest of your house until the worst of the damage is cleaned. You won’t notice the smoke smell on your clothes, but other people will. Cleaning smoke from your home and belongings is incredibly labor intensive, and becomes very expensive very quickly.
People don’t factor in all of the costs, or they don’t initially realize the amount of work a repair will require. A two foot by two foot section of damaged flooring usually means the whole floor needs to be replaced, which means all the furniture in the room needs to be moved and stored, and all the floor trim needs to be removed, put back, and painted, and if the floor is continuous to other rooms the same is true for those rooms too.
It’s easy to forget about labor – something like 75% of the cost of your home is labor, and some common activities are far higher. You can paint a room for fifty dollars worth of paint, but its $500 to get the pain on the walls.
People undervalue their contents – they often think in terms of garage sale prices, but the reality is you have replacement cost coverage for those items. Even a bag of old clothes headed for good will is worth a bunch of cash if they are damaged in an insurance claim.
So to decide whether or not to file an insurance claim –
Estimate the cost of your damage, drying, cleaning, personal property, materials, labor, etc., if the damage is more than your deductible, consider filing a claim. If you’re not sure, call us for advice.
By Jeff Britton