Content courtesy of Insurance Information Institute. For more information, please go to www.iii.org.
1. How do I file a homeowners insurance claim?
If someone has become injured on your property or if a violent storm destroys your home, you will need to file a claim with your insurance company. Remember, a homeowners insurance policy is a contract between you and your insurance company. And there are rules and procedures that you and your insurer must follow. Read your insurance policy to see what your responsibilities are.
Report any crime to the police.
If you are the victim of a theft or your home has been vandalized or burglarized, report it to the police. Get a police report and the names of all law enforcement officers that you speak with.
Phone your agent or company immediately.
Insurance policies place a time limit on filing claims. Find out what the time limit is. Ask questions: Am I covered? Does my claim exceed my deductible? (Your deductible is the amount of loss you agree to pay when you buy a policy.) How long will it take to process my claim? Will I need to obtain estimates for repairs to structural damage?
Make temporary repairs.
Take reasonable steps to protect your property from further damage. Save receipts for what you spend and submit them to your insurance company for reimbursement.
Prepare a list of lost or damaged articles.
You are going to need to substantiate your loss. Avoid throwing out damaged items until the adjuster has visited your home. You should also consider photographing or videotaping the damage. Prepare a home inventory, make a copy for your adjuster, and supply him or her with copies of receipts from damaged items.
If you need to relocate, keep your receipts.
If your home is severely damaged and you need to find other accommodations while repairs are being made, keep records of all additional expenses incurred. Most homeowners insurance policies provide coverage for the loss of use of your home.
Get claim forms.
Once your insurance company has been notified of your claim, the company is required to send you the necessary claim forms by the end of a specified time period. (The time period varies from state to state.) Return the properly filled out forms as soon as possible in order to avoid delays.
Have an adjuster inspect the damage to your home.
Your insurance company will probably arrange for an adjuster to come and inspect your home.
Once you and your insurance company agree on the terms of your settlement, state laws require that you be sent payment promptly. In most cases, your claim will be processed quickly. If you have any questions about the claim filing laws in your state, call your insurance agent or your state department of insurance.
2. How does the payment process work?
An adjuster will inspect the damage to your home and offer you a certain sum of money for repairs. The first check you get from your insurance company is often an advance against the total settlement amount. It is not the final payment.
If you're offered an on-the-spot settlement, you can accept the check right away. Later on, if you find other damage, you can "reopen" the claim and file for an additional amount. Most policies require claims to be filed within one year from the date of disaster. Check with your state department of insurance.
When both the structure of your home and personal belongings are damaged, you generally receive two separate checks from your insurance company, one for each category of damage. You should also receive a separate check for additional living expenses that you incur while your home is being renovated.
If you have a mortgage on your house, the check for repairs will generally be made out to both you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowners policy and that they are a party to any insurance payments related to the structure.
The lender gets equal rights to the insurance check to ensure that the necessary repairs are made to the property in which it has a significant financial interest. This means that the mortgage company or bank will have to endorse the check. Lenders generally put the money in an escrow account and pay for the repairs as the work is completed. You should show the mortgage lender your contractor's bid and let the lender know how much the contractor wants up front to start the job. Your mortgage company may want to inspect the finished job before releasing the funds for payment to the contractor.
Some construction firms require you to sign a form that allows your insurance company to pay the firm directly. Make certain that you're completely satisfied with the repair work and that the job has been completed before you let the insurance company make the final payment. Remember, you won't receive a check for the repair job. The construction firm will bill your insurance company directly and attach the "direction to pay" form you signed.
Bank regulators have guidelines for lenders to follow after a major disaster. If you have any questions, contact your state banking department.
The first step is to add up the cost of everything inside your home that has been damaged in the disaster. Now is the time to review your personal inventory, to help you remember the things you may have lost. If you don't have an inventory, look for photographs or videotapes that picture the damaged areas. For expensive items, you may also contact your bank or credit card company for proof of purchase. When making your list, don't forget items that may be damaged in out-of-the-way places such as the attic or tops of closets.
If you have a replacement cost policy, you will be reimbursed for the cost of buying new items. An actual cash value policy will reimburse you for the cost of the items minus depreciation. Regardless of which type of policy you have, the first check will be calculated on a cash value basis. Most insurance companies will require you to purchase the damaged item before they will reimburse you for its full replacement cost.
If you have financed your home, your lender may have received a check for both your home repairs and your possessions. If you don't get a separate check from your insurance company for your belongings, ask the lender to send the money to you immediately.
If you have a replacement cost policy, you may be required to buy replacements for items damaged before your insurance company will compensate you. Make sure to keep receipts as proof of purchase.
If you decide not to replace some items, in most cases you'll be paid the depreciated or actual cash value of the items that were damaged. You don't have to decide what to do immediately.
Your insurance company will generally allow you several months from the date of the cash value payment to replace the item. Ask your agent how many months you are allowed before you must replace your personal possessions. Some insurance companies supply lists of vendors that can help replace your property.
Additional Living Expenses
Your check for additional living expenses should be made out to you and not your lender. This money has nothing to do with repairs to your home and you may have difficulty depositing or cashing the check if you can't get the mortgage lender's signature. This money is designed to cover your expenses for hotels, car rentals, and other expenses you may incur while your home is being fixed.
Options for Rebuilding
If your home has been destroyed, you have several options:
Rebuild your home on the same site.
The amount of money you'll have to rebuild your home depends on both the type of policy you bought and the dollar limit specified on the first "declarations" page of your policy. Generally, you are entitled to the replacement cost of your former home, providing that you spend that amount of money on the home you rebuild. Remember, your insurance policy will pay to rebuild your home as it was before the disaster. It won't pay to build a bigger or more expensive house. A similar rule applies to repairs.
Decide not to rebuild or to rebuild in a different location.
The amount you'll get from your insurer will be determined by your policy, state law, and what the courts have ruled on this matter. If you decide not to rebuild, review your policy and ask your insurance agent or company representative what the settlement amount will be.
3. How is the settlement amount determined?
The settlement amount depends on which type of policy you have. Having inadequate insurance can affect the amount of compensation you get.
Replacement Cost and Actual Cash Value
Replacement cost provides you with the dollar amount needed to replace a damaged item with one of similar kind and quality without deducting for depreciation—the decrease in value due to age, obsolescence, wear and tear, and other factors. An actual cash value policy pays you the amount needed to replace the item minus depreciation.
Suppose, for example, a tree fell through the roof onto your eight-year-old washing machine. If you had a replacement cost policy for the contents of your home, the insurance company would pay to replace the old machine with a new one. If you had an actual cash value policy, the company would pay only a percentage of the cost of a new washing machine because a machine that has been used for eight years would be worth less than its original cost.
Suppose, also, that the tree damaged your 15-year-old roof so badly that it had to be completely replaced. If you had a replacement cost policy, the insurance company would pay the full cost of installing a new roof. If you had an actual cash value policy, it would pay a smaller percentage of the cost of replacing it.
Extended and Guaranteed Replacement Cost
If your home is damaged beyond repair, a typical homeowners policy will pay to replace it up to the limits of the policy. When the value of your insurance policy has kept up with increases in local building costs, a similar dwelling can generally be rebuilt for an amount that is within the policy limits.
Some insurance companies offer a replacement cost policy that will pay a certain percentage over the limit to rebuild your home—20 percent or more, depending on the insurer—so that if building costs go up unexpectedly, you will have extra funds to cover the bill. These are called extended replacement cost policies. A few insurance companies still offer a guaranteed replacement cost policy that pays whatever it costs to rebuild your home as it was before the disaster. But neither a guaranteed nor an extended replacement cost policy will pay for a house that's better than the one that was destroyed.
Mobile Home Policies
If you own a mobile home, you may have a policy based on replacement cost, actual cash value, or, in a few cases, a "stated amount." With a stated amount policy, the maximum amount you receive if your home is destroyed is the amount you agreed to when the policy was issued. The depreciation in the value of your home is not considered in the settlement. If you opt for the stated amount, update your policy annually to make sure that the stated amount will cover the realistic cost of replacing your mobile home. Check with local mobile home dealers to find out what similar homes sell for now.
4. What can I do if I'm having trouble settling my claim?
If you are unsatisfied with how your insurance company is handling your claim, you have several options:
Talk to the agent or company representative who sold you the policy.
Let the agent know that you are dissatisfied and explain the specifics of your problem.
Contact the claims manager of the company.
Provide a written explanation of your problem with copies of supporting documentation. Remember to send only a copy and not any original documentation. If you are insured with a smaller company, consider writing directly to the president. Going to the top can sometimes speed the process.
Contact your state insurance department.
Insurance is a regulated industry and your state department of insurance may be able to help you resolve your problem.
Consult an attorney.
If you have tried all of the above tips and still can't resolve the claim, you may want to talk to an attorney. You may have to pay a consultation fee for your initial visit. Meet with an attorney who has solid references or get the name of someone from your local bar association. Prepare for the visit by bringing a copy of your insurance policy and other relevant documents. Get the fee structure in writing before you decide to pursue the case.
5. What is a public adjustor?
Your insurance company provides an adjuster at no charge to you. Adjusters who have no relationship with your insurance company and charge a fee for their services also may contact you. These are known as public adjusters. You may use a public adjuster to help you in settling your claim.
6. How can I avoid scams after a disaster?
If your home was destroyed by a hurricane, wildfire, or other disaster, be cautious.
Unfortunately, there are dishonest service providers that prey on disaster victims. They know that people who have lost their homes and valuables may not be thinking clearly. If you have suffered this type of loss, don't make any rash decisions. Talk to your insurance agent, who may recommend service providers in your area.
Here are some basic guidelines for hiring service providers:
Roofers and Builders
Public Adjusters and Attorneys
7. How do I file an auto claim?
To file a claim, follow these steps:
8. What should I do if I am having trouble settling my claim?
If you are not satisfied with how your claim is being handled, there are steps you can take.
After your claim has been settled, take time to reevaluate your auto insurance coverage to make sure you have adequate protection to cover you against any future damage or liability claims.top
9. If I file a claim, will my premium go up?
You may be reluctant to file a claim because you fear that your premium will go up or your insurance will be canceled. Practices vary from company to company. In general, an insurer will increase your premium by specific percentages for each chargeable claim made against your policy above a specific dollar amount. A chargeable claim is one the insurer considers primarily your fault. The percentages and ceilings vary from company to company. These increases generally stay on your premium for three years following the claim.
Your company may also decide not to renew your policy if your driving record gets markedly worse or you have several accidents. Different insurers have different rules about what constitutes an unacceptably bad driving record. But some accidents, such as those caused by drunk driving, will probably trigger a nonrenewal from virtually every insurance company.
If you have an accident but don't report it to your insurer, you are taking a risk, even if the damage seems minor. If the other driver sues you weeks or months later, your failure to report the accident might cause your insurer to refuse to honor the policy. And even if they do honor the policy, the delay will certainly make it harder for the insurer to gather evidence to represent you.
10. How are the value of my car and the cost of repair determined?
There are several standard guidelines for determining the value of your car for insurance purposes. You and your insurer can refer to one of the books that list the depreciated value of all new and used cars. One of these books is published by the National Automobile Dealers Association another is published by Kelley Blue Book.
When you file your claim, your insurance company will refer you to a claims adjuster. The adjuster will verify the loss and determine what it will cost to repair the car. The adjuster's estimate can serve as a benchmark to which to compare your own mechanic's estimate.
No good adjuster or insurance company will expect you to sign an agreement accepting the insurer's estimate as the total claim payment until you've established, to your own satisfaction, that it will cover the cost of repair. The insurer will expect you to get your own estimate from your mechanic, garage, or car dealer. Don't allow yourself to feel pressured into accepting the insurer's estimate of repair costs without getting at least one estimate of your own.
Your insurance company can't require you to have repairs done at a particular shop. But they can insist that you get more than one estimate for the work to be done on your car. Just as you want to make sure that your car is adequately repaired, the insurer wants to make sure it doesn't pay a grossly inflated repair bill.
Don't be surprised if your insurance company opts to pay for the lowest bid. You don't have to accept that bid if you believe the low bid won't adequately repair your car. Don't hesitate to argue with the adjuster if you really believe his repair estimate is too low based on what your mechanic has told you.
One factor that could reduce the amount of your claim for a repair job is what insurance companies call betterment. If your old car is repaired with brand-new parts, your insurer may argue that the repairs have actually enhanced the car's value and therefore it legitimately can reduce your claim by the difference between a used part and a new one.
It is up to your insurer to decide whether to pay for repairing your car or to declare it a total loss and pay you its book value. Most standard auto policies will not pay to repair a vehicle if the repairs cost more than the cash value assigned to the car. There won't be any dispute about whether to repair the car if it was completely totaled. But you may argue about what the pieces of the car were worth when they were assembled as a car. For you to get a settlement higher than the book value of your car's make and model, you will have to submit evidence such as mileage records, service history and affidavits from mechanics to show that your car was worth more. You're entitled to the market price of the car you just lost. You shouldn't get more or less than what you are due.
11. What are my rights when filing a claim?
As a policyholder, you have certain rights. Every state has laws protecting consumers. Your policy is a legal contract between you and your insurer. It defines your rights and obligations as well as the rights and obligations of the insurance company.
If you have any questions regarding your rights under the policy, talk to your insurance agent or company representative. You may also contact your state insurance department, state attorney general's office, or state consumer affairs department.
12. Can my insurance company require me to use certain kinds of auto repair parts?
Your insurance company can't require you to use only certain kinds of auto repair parts. However, if the insurance company's rates are based on a certain type of part and you want something different, it can ask you to pay the difference if the part you want is more expensive.
The parts most frequently damaged in auto accidents are "crash parts." These are the sheet metal pieces that cover the engine and frame of the car. There are two sources for crash parts: auto manufacturers, who sell them under their own names, also known as original equipment manufacturers (OEMs), and generic or aftermarket crash parts suppliers. Studies have demonstrated that these crash parts do not affect the safety of the car. The development of a market in generic parts has brought prices for car replacement parts down and can help consumers save money.
In general, if generic parts have been ordered for the repair of your car, this information must be disclosed. The car repair order should state that the parts are not from the OEM and the warranty may be different. Many generic parts are made at the same factories as OEM parts, and in fact very few OEM parts are actually made by car makers.
Insurance companies that use generic parts guarantee the parts they use. If the part doesn't fit properly, the insurance company will generally put on an OEM part at no extra cost.
Some auto insurance companies offer their policyholders a choice between OEM and generic repair parts as part of an endorsement (addition to the policy that changes its terms and conditions) that includes other choices as well. Some always specify OEM parts for repairs, and some use OEM parts for repairing recent-model cars. A few states require insurance companies to offer generic parts when they exist and some may require OEM parts to be used.
Ask your insurance agent about your state's and your insurance company's claim settlement guidelines so that you'll know what to expect if your car has to be repaired after an accident.