5 Myths Why Homeowners Think They Should Not File a Property Damage Claim
It never ceases to amaze me when I have a homeowner think they SHOULD NOT file an insurance claim for different reasons. Homeowners pay thousands a year in insurance premiums, and then they are afraid to use it when something happens to their property. That same homeowner would not think twice about using their automobile insurance if they were in an accident. Still, property insurance is believed to be different because of five common myths listed below:
- “I don’t want my insurance rates to go up or be canceled.”
- “I cannot afford to cover my deductible portion.”
- “I do not think there is enough damage to cover my deductible.”
- “I am not sure that my Insurance covers this damage.”
- “The event that caused the damage was too long ago. I cannot file a claim now.”
Unfortunately, while these all sound like logical reasons not to file a claim, these are just myths and not based on reality. We will dive into each of these myths and help you to understand when you should file a claim and when.
“I don’t want my insurance rates to go up or be canceled ” is probably one of the most common reasons people do not file a claim. After Hurricane Andrew hit S. Florida, the insurance industry was in shambles, and many insurance companies either went out of business or just left the state. That is when Citizens was created to help those get covered. And Florida has an insurance program for high-risk properties that came out of the storm. The reality is that an Insurance company can cancel your policy for virtually any reason and often do. Still, there are plenty of other insurance companies to pick you up now, and you always have Citizens as a fallback option. The homeowner will not be denied the ability to get insurance in the State of Florida. Even mortgage companies have temporary insurance policies they employ if your insurance runs out. However, what about them raising your rates. Yes, this could happen, but it is less likely if you have your house repaired from damage that occurred to your property. Your property is less likely to have issues after repairing it than before it is fixed. Think about a roof. If you have a 20-year-old roof, it is more likely to have wear and tear, making it more susceptible to leaks or cracks that could allow water intrusion. Most insurance companies give you a discount when you put on a new roof on your house because the likelihood of damage goes down significantly. So the idea that filing a claim may make your rates go up is based on false fears that they could go down.
“I cannot afford to cover my deductible.” Most people think that property insurance works the same as medical insurance does with a Co-Pay. However, it does not work like that at all. Unlike a health insurance policy, the property damage deductible comes out of the payment the insurance makes to you to repair your damaged property. If you received $45,000 to replace your roof and you have a $5,000 deductible, you will receive a check for $40,000. After that, you can negotiate with whatever contractor you would like to get the roof repaired, and if it is for $40,000 or less, there will be zero dollars coming out of your pocket. The insurance company does not dictate who will fix your property, just that it gets repaired, so the property is back to its previous condition before the event.
“I do not think there is enough damage to cover my deductible” Sometimes, when you call the insurance company to file the claim, and they may say you have a $5,000 deductible, and do you think you have more damage than that. You may think I see a little stain in my ceiling, and I can paint over that and maybe get my roof patched. I do not believe that is more than $2000 worth of damage, so you do not file the claim. The reality is that unless you are an expert or have specialized equipment, you have no idea of the extent of the damage that could be occurring to your roof or your ceiling. In addition, it is common to underestimate how much needs to be replaced when only part of the floor or part of the wall is damaged on your property. Let’s say one section of your roof was damaged. You may think you can get that roof section replaced and be done with it. However, you have the contractor come out, and he tells you that he cannot match the tile on your roof because they do not make that roof tile any longer. So now you have a choice to go with an unmatched area of the roof, replace more of the roof so that it does not look so bad, or put the new roof on and repaint and seal the entire roof. Suddenly, the $2000 worth of damage you thought will put you back about $10,000 and in addition, the roofer finds another area of the roof that looks like it needs replacing because it appears to be cracked and loose now. He is now recommending you replace the whole roof. You cannot correctly estimate the damage to your property without an expert who can validate your thoughts.
“I am not sure that my Insurance covers this damage.” Close to 90% or more people never actually read their insurance policy. I would also guess of the 10% that review their policy, less than half would understand their policy language or coverages. Hopefully, I will clarify a better way to understand your insurance policy. The reality is that all property insurance policies are considered ALL RISK policies. Unless something is declared in the document to be excluded from coverage, the insurance policy covers the peril. So the simple thing is to look at your exclusions, and you know what you are Not covered and everything else you are covered. So here is the complexity begins. Do you understand the difference between water damage and wind damage and which caused the damage? You probably are not capable of determining that conclusion. That is why a Public Adjuster is so helpful as they can review your policy language and the damage to determine what coverages you may have to help pay for the damage that occurred to your property.
“The event that caused the damage was too long ago. I cannot file a claim now”. Hurricane Irma hit your property, and you had lots of debris that hit the house. You found many branches on top of your roof, some trees were knocked down, and your fence was broken in several areas. You feel lucky that the damage was not worse. You get an estimate for all the repairs, and it comes out to about $3000, much lower than your Hurricane deductible. You do not have anyone examine your roof as it looks like it is intact, and you think it is good. About a year later, a bad storm hits your area, and suddenly you start to notice your roof leaking. You might find water leaking somewhere unexpected, like on your closet floor, and next thing you know, you also have mold. Now you wonder how long the water leak has been happening. You assume since Hurricane Irma happened over a year ago, there is no way you can make a claim against that storm even though you strongly think that it may have been the culprit.
The reality is you have up to three years to file a claim for a catastrophic event like a Hurricane and up to five years for any other claim for damage to your property. In addition, any further damage that you repaired due to the storm can be applied to the deductible. You hire a public adjuster to examine your claim. He comes in and determines that a large portion of your roof has been compromised with cracked and loose tiles and recommends the entire roof get replaced. Because the claim was filed within the three-year window, it is still a viable claim. Even if you were paid initially for the claim on repairing your property and “new” damage you were unaware of when the storm occurred, you can “Re-Open” the claim and file a supplemental claim amount to get paid for the additional damage. A public adjuster can be essential in effectively representing you in a re-opened claim to receive the amount needed to repair your property correctly.
The big question of when you should file a claim answer is as soon as you realize that there is property damage to your home. However, even if you did not file it right away, you have up to three years on the Hurricane claim and five years on any other claim. However, the sooner you file, the better and the easier it is to document the damage from when it occurred adequately. It is essential to use your insurance coverage when you have damage, which is why you pay for insurance. If you decide to use a public adjuster, they can help determine new or old damage and what coverages you have to pay for your claim.