When should you file a claim on your homeowners insurance?

David Bakke is an Atlanta-based contributor for the personal finance resource, Money Crashers. He writes about money management topics including insurance options, investing, and retirement planning.

when should you file home insurance claimHome is not only where the heart is, it's where almost every one of your possessions of monetary and emotional value is, too. Homeowners insurance protects you financially against the loss of those possessions, and in most cases it does so in virtually all instances of damage to your property or belongings. Just because you have this financial protection, though, does not mean you should take advantage of it in every situation. There are in fact many cases where you'd be better off not filing that homeowners insurance claim. To find out more, read on.

When you should file a claim

If your home incurred significant damage from a major disaster like a fire, tornado, or flood, you obviously want to file that claim. In the event your loss or damages are significantly higher than your deductible, you should file as well. Where you set that threshold is up to you, but some scenarios are borderline propositions.

If your deductible is $1,000 and your damages cost $1,500, it may actually make sense not to file. Too many claims can spur your insurer to choose not to renew your policy. Take this into consideration especially if you recently made other home insurance claims. If you don't have a history of filing claims, however, you should be in the clear.

When you shouldn't file a claim

If an errant baseball breaks a window and an expensive flower vase inside your home, compare the replacement cost to your deductible. If the deductible is higher, pay for the repairs out-of-pocket. If you've filed a claim in the recent past, and your damages or losses are less than significant, think twice before pulling the trigger.

There is usually no specific language in your contract as to when your provider may choose to renew your policy, so if you're considering filing, discuss the matter with your agent first. If you eventually get dropped, your previous claims can affect your ability to obtain homeowners insurance from a new provider and you're likely to pay a higher premium. Also, check to see if your policy comes with what's known as a "claims free" discount. If yours does, factor in the amount of this discount into your decision to file.

How to prevent a home insurance claim

Avoid having to make a claim at all by maintaining your home diligently. You can do this by doing the following:

  • Keep your gutters and downspouts free from debris.
  • Inspect your roof and foundation for leaks and cracks on a regular basis.
  • Get your chimney cleaned at least every two to three years, and more if you build a lot of fires.
  • Make sure your smoke detectors are functioning properly. A good rule of thumb is to test them once a month.

If you devote the proper time and care to your home, your chances of having to make a tough decision on whether or not to file an insurance claim are significantly reduced.

Have you ever filed a homeowners insurance claim?

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