Should I File An Insurance Claim If I Have Water Damage In My Home?
Water damage in your home is no fun at all and it seems to always happen at the worst time. One question we get a lot is, “should I file an insurance claim?”. You’d think a simple question would have a simple answer but the truth is, it depends. Below, we’ll break down some of the most important things to consider when deciding to file a water damage claim.
Call a Water Damage Restoration Company, First. Do Not File a Claim, Yet.
In order to determine the extent of damage you need to get professional opinion. When you call a water damage restoration company they are trained to discover the extent of damage and use special methods and tools to find damage you may not have noticed. Furthermore, they can determine what drying methods can be used for your situation or if the wet materials need to be removed.
Once the extent of the water damage in your home is known and the drying method is determined, the water damge restoration company can give you an estimate for the cost to dry and remediate the water damage. While this number might not be precise, it should be close enough to give you an idea of what to expect.
Once you call the claim hotline and provide your information you will have a water damage claim on your record. The more claims you have on your record the more likely it is that your insurance rates/premiums will increase. We want to make sure it’s worth it to file a claim. More on this below.
Insurance Deductibles and Water Damage
Once you have an estimate to repair the water damage you can compare that number to your insurance deductible. An insurance deductible is a fee you have to pay the insurance company before they will open up coverage and pay for anything. For water damage, deductibles are usually 1% of your home value.
Example: a $500,000 house would have a $5000 deductible. This means your insurance company won’t pay out anything on the claim until the damage exceeds $5000.
If the estimate to remediate the water damage is only $3000 then there is no reason to file an insurance claim. However, if the estimate is $20,000 it makes much more sense to file a claim.
In scenarios where the damage is only slightly above the deductible, it may not make sense to file a claim as the amount you would receive from the insurance company (minus your deductible) is likely less than the additional premiums you’ll have to pay over the next several years.
Example: $6000 in damage – $5000 deductible = $1000 payout from insurance. However, if your premiums go up $100/month over the next 5 years you’ll pay an additional $6000 in premiums over the next 5 years. In these scenarios we recommend calling your insurance agent (not claims) to help you figure this out.
Do You Have Coverage for Water Damage?
If you have a good insurance policy you probably have coverage for water damage. Water damage is almost always a “covered peril”. Where this gets tricky is when you specify what kind of water damage you have. You mean there’s different kinds of water damage? Unfortunately, yes.
Insurance companies love to distinguish water damage situations. Generally speaking, “sudden and accidental” damage is covered. This could be things like a burst pipe, washing machine leaks, ect. However, things like slab leaks, flooding, or sewer backups may be excluded or have limited coverage. In short, this is because this type of water damage is often a lot more expensive and insurance companies don’t want to pay for it.
Before filing a claim, we recommend reading through your policy and calling your agent (NOT claims) to confirm coverage and any exclusions that may apply. Once again, it’s not in your best interest to file a water damage claim that won’t be covered because your rates/premiums could very well increase.
Final Considerations Before Filing a Water Damage Insurance Claim
It is never fun dealing with insurance claims. Especially when making the wrong decision could cost you money instead of saving you money.
If you skipped to the end of this article there are two important factors to consider before you make a water damage insurance claim. First, BEFORE you file a claim, call a professional water damage restoration company like Rewind Restoration to determine the extent of the water damage and get an estimate for the work. Once you have the estimate, compare that to your insurance deductible; if repairs are significantly higher than your deductible it probably makes sense to file a claim. Second, read through your policy and/or call your insurance agent (not claims) to confirm you deductible and that you have coverage. Depending on the type of water damage, you may have a policy exclusion or limited coverage.