How Do Home Insurance Claims Work?

The exact details of how home insurance claims work varies depending on insurers, but most companies require an intensive claims process before payments are issued.

What Is Home Insurance?

Home insurance or homeowners insurance is a type of insurance policy which protects a home and the possessions within. This coverage is not just a good idea – most mortgage companies require homeowners insurance as a term of the loan. If homeowners don’t supply a sufficient homeowner’s policy, their mortgage lender may place a policy at the borrower’s expense.

What Does Home Insurance Cover?

Generally, home insurance policies provide coverage to a home’s interior, exterior, and possessions in the event of damage, natural disasters, and theft. Policies may also provide personal liability coverage when others are harmed.

Exact coverage will vary depending on a policy’s terms. The three basic levels of home insurance coverage include: actual cash value, replacement cost, and extended replacement value. These types of coverage indicated how much damage or losses will be covered under a policy.

In addition to different levels of coverage, there are six different types of coverage. Each of these categories may be associated with a certain deductible or limit, based on a policy’s terms. The six main types of home insurance coverage include:

• Dwelling: This coverage compensates homeowners for damage to their home and its attached structures (porches, etc.).
• Other structures: This coverage covers non-home structures on a homeowner’s property including sheds, fences, and more.
• Personal property: Unlike other forms of coverage, this coverage includes belongings within a home that are damages or stolen.
• Living expenses: This coverage helps compensate homeowners for hotel costs and other additional living expenses incurred while they cannot live in their home due to damage.
• Liability: This coverage compensates injured people or damaged property if the homeowner’s neglect led to this damage.
• Medical: Similar to liability coverage, this coverage compensates injured people for their medical expenses.

Typically, dwelling coverage will be enough to rebuild a home if it is completely destroyed. Other types of coverage may be a percentage of this dwelling coverage (10% for other structures, etc.) or a hard limit ($5,000 for medical, etc.).

How Do Home Insurance Claims Work?

After a home sustains damage in an accident or natural disaster, homeowners may be overwhelmed and wondering “How do home insurance claims work?” Although the process of dealing with damage to a home can be stressful, home insurance claims don’t have to be.

Once a consumer knows that they will need to file a claim with their insurer, they should do so promptly. Claims should include documentation of damage and other details a claims adjuster needs. Adjusters will also be sent to the property to physically evaluate the property damage.

After a claim is filed, homeowners may receive several payments in stages. An initial payment may be issued after an adjuster inspects the home as an advance on the total settlement the company offers. When a disaster or accident impacts multiple types of coverages, homeowners may receive payments for this coverage in separate checks.

In other cases, home insurers may pay contractors directly for repairs. Payments for living expenses, replacement belongings, and other items may be issued after these expenses have been documented and accepted by the insurer.

However, the exact payment process of a home insurance claim may vary depending on a policy’s terms, the situation, and the insurer.

If you’re worried about filing a home insurance claim, you may be able to seek help from an experienced attorney. These professionals can help you negotiate with your insurance company and, if necessary, appeal a decision from your insurer.