Understanding the Homeowners Insurance Claim Process

If an unforeseen event, like a natural disaster or a theft, occurs and you experience loss or damage, you will need to file a homeowners insurance claim. Understanding the homeowners insurance claim process will increase the likelihood of a favorable claim, ensuring it goes as smoothly as possible.

What Are the Steps of a Homeowners Insurance Claim Process?

Homeowners insurance provides financial protection to protect homeowners in case of a variety of covered unavoidable events that could negatively impact their home and property. There are two primary claims associated with homeowner policies: damage claims and liability claims.

Property damage claims are made when something bad happens to your insured property, like water damage, theft, and vandalism, or covered disasters. Your insurance company will check out the damage, see if it is covered under your policy, and then decide how much they’ll pay you, depending on how bad it is and what your policy says.

Meanwhile, liability claims come into play when someone holds you responsible for harming their property or causing bodily harm. Liability insurance serves as a shield for policyholders, covering their financial losses if they are legally found responsible for damaging someone else’s property or causing injury.[2]

Insurance specialist Kristopher Kane encourages people not to overlook liability insurance. “It’s an absolute must-have for homeowners. Accidents happen, and if someone gets injured on your property, you could be held financially responsible.”

Liability coverage safeguards you from the burden of hefty medical or legal bills that could come knocking. Kane explains, “It doesn’t matter how a person might be injured while on your property. Everything, from a dog bite to a fall, can result in significant financial responsibility for the homeowner. Without coverage, that can be a serious and expensive risk.”

Essential Terms

Making a homeowners insurance claim involves several steps, but before we delve deeper, let’s first define a few essential terms:

• Deductible: The amount paid out of pocket before insurance coverage kicks in
• Adjuster: Insurance professionals who evaluate the damage, assess coverage options, and calculate payout amounts
• Claim: A formal request to your insurance company for coverage or reimbursement
• Out of pocket: The expenses you must pay yourself, including the deductible and any costs not covered by your policy

Common Steps of the Homeowners Insurance Claim Process
Immediate Steps After a Loss	In the interest of safety and prevention of further damage, contact your insurance company to report the incident right away.
Filing a Homeowners Insurance Claim	File a claim to officially notify your insurance company about the loss, providing details and initiating the claim process.
Claim Investigation & Evaluation	Insurance adjusters assess the damage, review your policy, and calculate coverage and payout amounts, often through an on-site inspection.
The Claim Decision	After evaluation, the insurance company decides whether your claim is covered under your policy and offers a settlement, minus your deductible.
Claim Dispute & Appeal	If you disagree with the settlement, you can dispute it, providing more evidence and negotiating for a higher amount. If needed, there’s a formal appeal process to resolve disputes.

1. Immediate Steps After a Loss

Right after a loss, the situation can be stressful. In such moments, it’s essential to prioritize safety above all else. Here are the main things to focus on:

• Ensure that you and your loved ones are out of harm’s way.
• If it’s safe, take action to prevent more property damage, like turning off water or electricity, covering exposed areas, or securing your home.
• Contact your insurance company promptly to report the potential loss. This is essential to begin the claims process quickly.

2. Filing the Homeowners Insurance Claim

When filing a homeowners insurance claim, an insurance adjuster will play an important role in the process. Here’s how it works:

• Reach out to your insurance provider immediately following an incident to report it and provide essential details, including when and where it happened, what was damaged or stolen, and any additional details that may be needed.
• Once your claim has been filed, the insurance company will appoint an adjuster who will investigate and assess any damage or liabilities associated with the event.

3. Claim Investigation & Evaluation

At this step, an insurance adjuster inspects the damage and verifies whether your claim is valid. They’ll also look over your policy, so they know exactly what is covered and in what amounts, the amount of damages, what you have paid (deductible), and what amount of the damages is left over to be paid by insurance.

Deductibles represent what you pay out of pocket before insurance covers the rest.[3] With a $1,000 deductible and $5,000 claim approval, for example, the net payout would be $4,000 ($5,000 minus $1,000). 

For proper protection, it’s essential that you obtain sufficient insurance coverage. Insufficient coverage could force you to pay more out of pocket, and with some claims, this can be a substantial financial burden. 

Be sure to regularly review and update your coverage as needed to make sure that you always have an appropriate level of coverage.

4. The Decision of the Claim

When the insurance adjuster comes to a decision on your claim, determining if your request is valid and what amount of the requested payout will be honored, you will receive notice from the company. 

Approvals & Denials

After a thorough assessment, your insurance company will decide whether to approve or deny your claim. Approval means they agree to cover the costs of the loss, while denial means they believe the claim is not valid or falls outside the scope of coverage.

Partial Payments

Sometimes, a claim may not be fully approved or denied. Instead, the insurer might issue a partial payment, which covers a portion of the claimed amount. This can happen if there is uncertainty about coverage or the extent of the damage.

Handling Homeowners Insurance Claim Denials & Disputes

There are a number of reasons why your insurance claim may be denied, but the most common include the following: 

• Policy exclusions or limitations: Insurance policies often exclude certain things from coverage. If your claim falls into one of these exclusions, it might be denied. For example, if your policy doesn’t cover certain natural disasters, and your claim is related to one, it could be denied.

• Lack of sufficient evidence: Insurers require evidence that the loss or damage occurred as claimed. If you can’t provide enough proof, your claim may be denied. For instance, if your home was burglarized but you can’t provide a police report or other evidence, your claim might not be approved.

If you disagree with the insurance company’s decision, you have options, such as these:

• Mediation and arbitration: Mediation involves a neutral third party helping both you and the insurance company find a solution. Arbitration is a more formal process where an arbitrator makes a final decision. These options are often faster and cheaper than going to court.

• Legal advice: If mediation or arbitration doesn’t work or you suspect your insurer is acting unfairly, you can consult with a lawyer who specializes in insurance law. They can guide you through the legal process and protect your rights.

Appealing an Insurance Claim Denial

Take these steps to appeal a homeowners insurance claim denial:

Review the Denial Letter

Carefully examine the denial letter to understand why your claim was denied and what evidence is required for an appeal.

File an Appeal

Take these actions to do so:

1. Contact your insurer to express your intent to appeal.
2. Request the appeal process details, including deadlines.
3. Gather supporting evidence, such as photos, estimates, and records.
4. Write a clear appeal letter citing your policy details.
5. Submit the appeal and documents as instructed.

Seek Help if Needed

If the process seems challenging, consider consulting a legal expert or insurance advocate for guidance to strengthen your appeal. While this does involve additional expense, it often results in a much higher settlement amount, ultimately putting more money in your pocket even after deducting legal expenses. 

How to Expedite Your Homeowners Claim: Tips for an Efficient Process

When it comes to homeowners insurance claims, efficiency matters. Here are some tips to expedite the process: 

Keep Documentation & Collect Evidence

Create a home inventory, save receipts for valuables, and take photos of damage to streamline the claims process.[4]

Report the Claim Quickly

Act fast to meet claim time limits and prevent further damage. Filing quickly helps to mitigate further damage and accelerate the claim process.

Cooperate With the Insurance Company

Be present during assessments, provide accurate information, and answer questions promptly for an easier claim process.

Be Proactive

Take charge by requesting decision dates and following up with the insurance company. Being proactive ensures you stay informed and helps move your claim forward efficiently.

Frequently Asked Questions About the Homeowners Insurance Claims Process

We have gathered some of the most frequently asked questions about homeowners insurance to help you better understand this essential coverage: