If your house gets damaged or your possessions get destroyed or stolen, your homeowners insurance company can pay for repairs or replacement. In some cases, though, it’s in your best interest not to file a claim.
If you don’t plan to seek compensation from your insurance company, notifying your insurer may be advisable, or even required. In other cases, that can do more harm than good.
Why You Might Decide Not to File a Homeowners Insurance Claim
When you file a claim, you have to pay a deductible before the insurance company will cover your loss. If the cost to make repairs or replace damaged property is less than your deductible, it doesn’t make sense to file a claim because you won’t get any money from the insurance company.
If repair and replacement costs will be more than your deductible, it may be in your best interest to pay out of pocket, even if you’re entitled to compensation. Filing a claim can cause your premiums to increase, especially if you have already submitted multiple claims. If you file several claims in a short period of time, your insurance company may even cancel your coverage.
Pros and Cons of Telling Your Insurer About Damage
When you contact your homeowners insurance company to file a claim, that information gets submitted to the Comprehensive Loss Underwriting Exchange (CLUE). It’s a database that insurance companies use to assess risk and set customers’ premiums. If you contact your insurer to discuss damage, that can get reported to CLUE, whether you file a claim or not. Information in CLUE can impact your homeowners insurance rates for years, even if you switch carriers.
If your house has minor damage that you can have fixed on your own, it may be best not to get your homeowners insurance company involved at all. If, however, your house experiences major damage, you should file a claim, even if it might raise your rates. You most likely won’t be able to pay for major repairs out of pocket, and you should only use your homeowners insurance coverage when you really need it.
Sometimes damage appears minor, but it’s actually much more serious than it seems. For example, a few missing shingles may not seem like a big deal, but there may be significant water damage that isn’t visible. Your insurance company can send an adjuster to inspect the damage. If it turns out to be significant, you may decide to file a claim after all.
You may have to notify your homeowners insurance company about damage even if you don’t intend to submit a claim. Many insurers require a customer to inform the company if an accident or injury occurs that might result in a claim. If you have any questions, review the terms of your policy.