Filing a Home Insurance Claim vs. Paying Out of Pocket

When it comes to your Massachusetts homeowner’s insurance, you may be tempted to think, “Well I pay for it, so I’m using it!” That thinking may work for gym memberships, discount club memberships, and when you accidentally order too much pizza, but your homeowner’s insurance is a different story.

Too many claims will not only increase your premiums but could result in your policy being canceled. It helps to know when you should file a claim and when you should pay out of pocket.

Paying Out of Pocket

There are several times when it’s better to skip the claim and pay to have a problem fixed.

  • The repair is less than your deductible: The insurance company won’t pay for any expenses, but the claim will be added to your file.
  • The cost is “minor” in relation to the claim: The claim totals $1,200, and you have a $1,000 deductible. The insurance company pays out $200 and the claim gets recorded.
  • Multiple claims in the last few years: Every company is different. Some won’t cancel you if you have a few claims in a decade and some will cancel you for two claims in less than three years.
  • The need for repair was caused by lack of maintenance on your part: The insurance company may pay to repair the damage, but they’re not going to pay to fix something you should have maintained, and if they do, you’ll still be dinged for it.
  • Your policy doesn’t cover it: Your claim will be denied, but the claim will be added to all other previous claims, raising your premiums or getting your coverage canceled.

File the Claim

There are certain times, beyond a shadow of a doubt, that you need to file a claim. Don’t even hesitate to call.

  • Always make a claim when someone is injured on your property. This will cover you in case of a lawsuit.
  • Make a claim for water damage over $10,000. It’s likely that after water damage, your insurance company may cancel your policy at the end of the term because of the threat of mold damage. It’s better to make the claim only for really expensive damage since that’s the likely outcome.
  • File a claim when other damages (not water related) are more than $3,000. If you can afford it, fix anything else below that amount and you’ll save yourself higher premiums next year.

Not all insurance companies are the same, and not all of them will automatically raise your rates or cancel your policy, but it’s better to be safe than sorry. Ultimately, you’ll save time and hassle to avoid the small claims and use your insurance when you need to protect yourself or the damage is simply too big for you to handle on your own.

Got questions about your current homeowner’s insurance policy? Want a quote for a new policy? Give us a call.