Check out your home insurance
If you don’t know how to make a homeowners’ insurance claim, that’s a good thing in one sense. It probably means that you’ve never been burglarized, suffered a house fire, been hit by a flood or tornado, or sued by anyone.
But it’s important to know how to go about making a claim, should the need ever arise to ensure you recover as much as possible from the loss.
What to do
In the case of theft, there are two parties to notify, the police and your insurer.
Call the police first and report the incident.
Then, as soon as possible, notify your insurance provider. This may be your broker, your agent, or the insurance company itself.
Before you ever need to make a claim, find out whether any of these parties offer a 24-hour reporting hotline, and have the number handy. Your insurer may even be able to help you to arrange assistance from glaziers or locksmiths if temporary repairs are required.
Support for claim
If you have experienced a theft or a fire, reasonable evidence of your purchase, or at least ownership, of the stolen items will be required in order to support your claim. This is a case of the mor the better. This could take the form of receipts, photographs, or even a video inventory recorded with your video camera.
Keep any such evidence in your safety deposit box. Don’t store it at home. In a fire, it will disappear along with everything else.
An adjuster will be assigned to review and settle your claim. He or she may be employed by the insurance company or may be an independent adjuster contracted by the insurer.
This person will investigate your claim and make a recommendation to the insurer as to whether or not to pay the full amount you requested, some lesser amount, or reject the claim entirely.
Who has the final say? The insurance company will notify you of their decision. If you think the amount offered is insufficient, however, you are not obligated to accept it. But the onus will be on your shoulders to prove why a higher payment is justified. This is where sales receipts and other documentation come in handy. And don’t forget the deductible you’ve committed to pay.
Reimbursement or cash value
You should know whether your policy provides replacement cost or actual cash value.
The former means that the insurance company expects you to use the insurance funds to replace the lost or stolen item with one which is as similar as possible in terms of quality and functionality. They may even ask you to submit sales receipts for the new items to prove you used the funds appropriately.
The latter involves paying you only the depreciated value of the lost or stolen item. Depreciation is the cost of the estimated wear and tear on the item that was lost/damaged, or the reduction in the item’s value due to age and/or use.
Obviously, a “cash value” policy could result in your claim being heavily discounted, especially when it comes to such things as clothing and furniture.
Be sure your policy covers you for “replacement cost”. The premium is slightly higher, but well worth it.