Homeowners insurance is a crucial safety net for all homeowners. You’ll be thankful that you have a policy set up when disaster strikes. Your insurance company’s settlement should help you shoulder the repairs for damages and get everything back to normal.
But don’t let this give you a false sense of security. Your homeowners insurance comes with some caveats that you should know about before you need to file a claim.
1. Claims Take Time to Process
The pay-out to cover damages won’t arrive the instant a disaster is over. First, you’ll have to file an insurance claim. Then, your claim will need to be processed by your provider. If the provider accepts your claim, they may offer you a settlement amount. If you accept, you can use those funds to cover the damages. In some cases, your company may pay your mortgage lender or contractor to guarantee that the funds are used properly.
The entire process could be done in a matter of days, weeks or months. Depending on your circumstances, you could be waiting a long time to receive the funds you need.
What can speed up an insurance claim?
- File a claim as soon as possible after the disaster.
- Fill out the claim without errors. Errors will need to be corrected, which will increase the processing time.
- Add necessary evidence to your claim, like photographs of the damages.
- Respond to company representatives quickly. Being slow to respond means your funds will be slow to receive.
In some cases, you can’t control the speed of the approval process. For instance, if you’re making claims after a house fire, the process could take months to complete. Why? The company may need to investigate the property in person to assess the damages. They may also need to eliminate any suspicion of arson and insurance fraud.
2. You’ll Still Pay Out of Pocket
Even if your provider accepts your claim, you’ll still have to pay a portion of the costs out of pocket because of your policy’s deductible. You can find the established deductible for your homeowners insurance on the front page of your policy. A common deductible is $1000. So, if the damages cost $5000 to fix, your insurance may only give you $4000 — of course, after you pay the $1000 deductible.
Homeowners insurance shouldn’t be your only safety net. You should also have an emergency fund that you can rely on when something goes wrong. If you need to pay for a deductible out of pocket, you can turn to this collection of emergency savings to do so.
What if it’s not enough? If your emergency fund doesn’t have enough savings in it, you could turn to a credit tool for help. Charge the urgent expense to a credit card and then pay down the balance later. Or you can apply for a personal line of credit online. With an approved personal line of credit, you could request a withdrawal within the limit and use the borrowed funds to cover the expense. Learn the benefits of a personal line of credit vs credit card to see which option is right for you. The information could help you when you’re facing an emergency expense.
3. Your Problem Might Not Be Covered
It’s easy to assume that all household disasters are covered by homeowners insurance, but that’s not necessarily true. Damages from overland flooding, sewer backup and pest infestation are common exemptions from homeowners insurance policies.
If you’ve opted for liability coverage in case someone gets injured on your property, you should know that there are exemptions for that too. For instance, certain dog breeds are banned by homeowners insurance policies. So, if your dog bites or injures someone and you need liability coverage, your policy might reject your claim because of its breed.
Learn all of your policy exemptions ahead of time so that you’re never surprised by a claim denial.
A household disaster is an incredibly stressful situation to deal with. You should know these caveats about your homeowners insurance so that you don’t add any more stress to your situation.