Are you trying to get the answer to, “How are homeowners insurance claims paid?” Read this article to learn more about how they work and what they cover.
95 percent of homeowners in the U.S. have insurance, and a staggering 98 percent of their claims are filed because of property damage. It’s important to understand your insurance policy before you need it.
You may also wonder, how are homeowners insurance claims paid?
Read on for important information that will help you in the event of damage to your home.
Understand Your Policy
When you purchase a home, your lender will require that you obtain homeowner’s insurance. It will cover a portion of the expenses related to repairs and replacements if your home is damaged.
That damage could be caused by something small like a leaking pipe or a tree blown down on your fence. It could also be far more significant, like a tornado or hurricane. Take some time now to read your policy and understand what it covers.
Make you sure know what certain terms mean like “deductible” and “additional living expenses”.
What to Do When Your Home Is Damaged
The first thing to do is to assess the damage and determine if it needs immediate attention. If your roof is damaged, do your best to get a tarp over the hole to prevent water from getting inside.
Some insurance companies require that the homeowner take immediate action. You also want to avoid compounding the problem by letting water get into your home. Understanding water damage is critically important because mold can start growing in as little as 24 hours!
If your home was damaged as a result of a crime, file a police report as soon as you can. Some insurance companies will require a police report if your home was damaged as a result of a burglary or vandalism.
Call your insurance company and report the damage. Take notes on every contact you have with the company including the date and time of the call, who you talked to, and what the person said.
How Are Homeowners Insurance Claims Paid?
The short answer is, not all at once in most cases. In fact, it’s not unusual to receive more than one check. You could receive one check early in the process to cover something called Additional Living Expenses (ALE).
These are the expenses you’ll incur as a direct result of your home’s damage, especially if you can’t live in it. You may receive compensation for rent, food, or travel expenses.
You may receive additional checks for repairs to the home or for replacing damaged items. If you have a mortgage, the check may be made out to you and to your lender.
Be sure to look at how the check is written. If it’s payable to you and to XYZ Mortgage Company, you must have someone from that company endorse the check too. Your bank will not negotiate a check without all the signatures.
You may not get a check at all. Your insurance company may pay the contractor directly, so be sure to ask about that.
Be patient. It can take 18-24 months to finish the repairs and replacements if you’ve suffered a significant loss.
Consider Not Filing a Claim
Finally, you should weigh your options if the damage to your home is not serious. You may be better off not filing a claim if the repair costs are less than your deductible.
Hopefully, this article has provided answers to the question, how are homeowners insurance claims paid? Please check out our blog for more great information on issues facing homeowners.