Insurance and Finance

When Is It Worth It to Claim?

By Peter Simek 5.7.18

Quality insurance coverage of your home is all about peace of mind. If your home is broken into, a pipe bursts, a storm damages the roof, or a fire leads to a total loss, insurance can help you replace what you’ve lost and begin to get you back on your feet.

But when does it make sense to make a claim, and when is an incident too small to bother?

Know Your Deductible

Marcia Allen, a Texas Farm Bureau Insurance Agent in Grapevine, says the decision to file a claim often comes down to the extent of the damage and the amount of your deductible.

“Typically, on home insurance, you have a 1 percent deductible, so for a house insured for $150,000, the deductible is $1,500,” Allen says. “In this example, if whatever has gone wrong can be replaced or repaired for less than $1,500, I wouldn’t file a claim.”

Insurance deductibles are applied on a per-incident basis. It wouldn’t make sense to spend more on a deductible than the value of any property lost or the cost of any damage that needs repair — especially if a claim could have an impact on your premiums.

Get an Estimate

The first rule of thumb when you have any potential claim, Allen says, is to obtain a good estimate for repairing the damage.

Call service contractors and solicit estimates on the cost to fix or replace what has been damaged or lost. In the case of a burst pipe or some other physical damage to the house, don’t forget to include the remediation cost in your estimate. Sometimes the cost of fixing a pipe won’t be worth filing a claim, Allen says, but remediation of the damage caused by the water could add up quickly.

“The restoration can be included in your claim, because they want you to do whatever you can to mitigate further damage,” Allen says.

Calculate the Impact on Your Premium

Another consideration before filing claims is how it might affect your premium. Fire and theft claims will likely cause your premiums to increase. But a single water claim or an act of nature like wind or hail will not negatively impact your premiums.

Multiple water claims, however, can increase your premiums, Allen says; if you have two or three in a single year, the insurance company may start to wonder if you are doing enough to maintain your home.

Consider the Value of Your Repair

Was what was damaged or lost something you want to replace? If you experience a burglary, for example, and you had an item stolen that you don’t use, don’t treasure, or that doesn’t meet the cost threshold of the deductible or justify the rise in premium rates, the best thing might be to let it go.

Your local Texas Farm Bureau Insurance Agent can walk you through all the details of your coverage. Call to schedule a 360 Review today for a thorough review of your insurance needs.

For more homeowners insurance advice, find out how refinancing could affect your premium.

Coverage and discounts are subject to qualifications and policy terms and may vary by situation.

© 2018 Texas Farm Bureau Insurance