To File (a Claim) or Not to File

5 Replies

Hello BP Community,

I'm about 6-7 months on the site but slowly starting to be more active on it.  I'm trying to decide whether to file a claim on the roof of my 40 unit apartment.  I'm only a few months into the property and still finishing up the initial rehab but it appears that some mid-western storms did damage that will run about $60K. No roof significant roof issues showed up during inspection.  It was really really hard to insure this building (went through several brokers) mainly because its old.  I can pay out of pocket and leaning that way because i don't want to get dropped or have it significantly increase.

I saw another similar post but the claim was about $1500 with a 500 deductible.  

Thanks very much for the thoughts.


I didn't know this until I purchased my current home in 2003, but there's something like a credit bureau for houses. Don't know if they have the same thing for multi-family. They keep track of claims filed and any claims in the last three years are held against you even though you may be a new owner who did not make the claims.

When I bought this house there were a couple of claims by the previous owners and I had a heck of a time finding insurance. I finally had to go to a high-risk policy and paid an outrageous price.

The two claims that caused the trouble were water-related (not flood). The funny thing is that they didn't even mention the new roof put on the house the previous year due to hail damage.

Even today I have a $15,000 cap on water damage. So whenever I go out of town for a few days, I always shut the water off when I leave.

I always recommend to not make a claim if at all possible. But $60,000 is a lot of money and I don't know that I would want to eat that.

There is a C.L.U.E report (for personal property, so if this is for a business entity, this may not be applicable - just FYI):

Your loss amount of 60k is a great deal of money, so there are multiple variables. The first being, were the damages caused by a "Covered Loss" as defined by your policy terms? Second, as Fred indicated in his post, whenever you make a claim it is noted and you will be paying for it overtime. You ultimately need to weigh the pros and cons.

All I can say is that I have numerous clients who were insured by preferred carriers like Travelers, etc, and when they had claims for "x" amount, their annual premiums increased several thousand dollars; which they weren't happy about, but in the end, they had to stay where they were, because I couldn't find them anything cheaper with the claims on their loss runs (these are records of your claims filed are asked for by any carriers you want to be insured with in the future).  Some of my clients had claims in excess of 20k (several different clients with claims from 20k-40k). In polite ways, I let them know they probably should be glad their polices weren't cancelled as a result of the loss, and I couldn't find anything less expensive. 

In my opinion, if paying an additional $2-4k annually for a few years will get your roof paid for, and you are still insured; it's a small price to pay. With that being said, you never know if they will not drop you at either mid-term or when your policy renews; which means you would STILL be looking for a carrier to insure you at that time. The good thing I can say is that you likely would be able to get another insurance company to take you on; however, the bad news is, it would likely be more expensive.

*Disclaimer - I am a prior Claims Specialist and am a Commercial Insurance Broker

Thank you both for your response.  The building is under a business entity so I will look into what you said about CLUE. I'm having a discussion this morning with the broker that got me the insurance to get some thought from him as well.

Your claim record would be out there for any other potential insurance carrier to see.  Various ways and databases to look in to find claims history.

I dont work a lot on the commercial side, however know the underwriting guidelines are a bit more exhaustive vs a typical residential policy.

As Chante stated, make sure the incident was a covered loss, and keep in mind if it hailed more than once, or there was a wind storm one month, tree branch fell the following week, then a hail storm 2 weeks later all in the same summer - those are 3 separate claims/events.   If it hailed multiple times you might be able to get that covered under one loss (I'm in no way condoning that) however if there were different severity's from the storms, they may try to separate them out.

Some food for thought.   If the storm damage you are referring to would get you a new roof, I'm sure you'd have much better luck finding a new carrier if your present one dropped you at renewal or the following year due to claims activity.  I dont know what kind of roof it is etc - however if you have a good broker, you can discuss things with them like discounts for Class IV (Impact resistant) shingles etc.

My disclaimer is I've been a claims adjuster for 11 years too long.  $60k is a big chunk of change, depending on how you have your coverage structured and if the loss is covered etc, and if its roof or mechanically related, you might get some nice capital improvements by filing the claim on the insurance dime -- will just have to weigh the pro's / con's and the financial aspects of your different decisions available to you.  

You pay for the coverage, so don't feel guilty or apprehensive in filing the claim - that's what it's there for.

Just having roof damage doesn't mean you will be covered. It is not a maintenance policy. If you can't point to a specific event (day/time) then there is a good chance your claim will be denied. Anything that resembles long term water damage can trigger a denial and the chances of being non renewed is very high.