Is It a Bad Idea to Make Insurance Claim?

Question

Hello Everyone,

To make a long story short, I want to make a claim on my primary residence to replace my roof. Deductible is about 2K roof will easily cost 7K without.It’s not leaking just getting old and everyone in the neighborhood is doing theirs.

I have more insurance policies then I can count on my hands for other properties. My fear is, If I make a claim will this effect my other policies?

I have always tried to stay clear of making claims for this fear. Is there truth to it or just rumor?

Thanks!

Todd Rasmussen · Answer

@Tariq B.

There is big truth to that and insurance doesn't cover something that is just at end of life. You should get with your insurance broker or agent and freshen up on what is/isn't covered and what your coverage amounts are. Providing you have a reserve, you will probably find that increasing your deductible, retaining the risk of smaller losses and realizing some premium savings is a best practice of most investors with multiple properties.

Michael Peters · Answer

It could but it depends on your provider.  Get them to look at the property in question so see if its even on the table then have the conversations above.  Then just run a cost benefit.  Most insurance claims will prorate the roof based on its remaining life expectancy on top of your deductible.  I like the idea of keeping a larger deductible like 10K and only using it when its truly needed.

Tariq B. · Answer

Thanks guys, I guess my question is if I make a claim on one property. Is it going to affect my other policies?

Paul Shannon · Answer

It costs nothing to get your insurance adjuster out to take a look.  2 weeks ago I had my roof replaced, gutters and downspouts too, on my primary residence.  We had a minor hail storm on 4/8.  My neighbor's brother is a roofer and had him out to look at some of the homes.  4 out of 5 of them had their roofs approved.  I didn't think the damage warranted full replacement, but with 4/5, I thought it'd be worth a shot.  Sure enough, full replacement.

My wife is a commercial insurance underwriter.  She educated me that If you're damage is from a "cat" (catastrophe) your rates will not go up.  Act of God.  If you are negligent, like leaving water running in a bathtub upstairs that floods 3 floors and causes damage, your rates do go up.  But your claim at one property should not affect your other policies or rates.  And the worst the insurance company can do is say no.

Jose Linares · Answer

@Tariq B. Was there a recent storm that went through your neighborhood and that is why your neighbors are getting their roofs replaced?  Your insurance policy typically will only cover the cost to repair or replace the roof from "direct physical damage".  That means if there was hail or wind damage to the roof, there is potential to get coverage for the roof repairs or replacement.

Full roof replacement is still not guaranteed because it will depend on how much of the roof was impacted by the storm.  Also, ensure you have Replacement Cost Value (RCV) on your roof and not Actual Cash Value (ACV).  Depreciation is withheld based upon the age, condition, and useful life of the roof.  You can recover the depreciation once the repairs are completed with an RCV policy, but not with an ACV policy.

If a claim is related to a storm or catastrophic event, it will typically not affect your premiums but you will want to discuss that with your agent.  Discuss the pros and cons with your agent of filing a $7K claim.  Be sure to also ask how much replacing the roof will save you in premium.

Feel free to reach out if you have any other questions.

Is It a Bad Idea to Make Insurance Claim?

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