At Wedgwood, we understand that home insurance premiums are rising, and securing coverage can be challenging, especially in what’s known as a “hard market.”
When extreme weather events and other catastrophes increase the pressure on the insurance industry, premiums and renewal terms reflect these realities. Insurance companies tend to take on less risk and raise rates to manage escalating claims, litigation, and material costs.
Home insurance is an investment you hope you never need to use. It protects you from unexpected events such as theft, vandalism, and natural disasters. In a major catastrophe, filing a claim helps you recover from significant losses. But what about more minor incidents that don’t reach that threshold? They may not be disasters, but they aren’t inexpensive either.
It’s essential to consider when to file a claim carefully. Knowing the right time can save you both stress and money in the long run.
Understanding Your Deductible
A deductible is the portion of a loss you are responsible for before your insurance coverage kicks in. For example, if a storm damages your roof, and the cost to repair is $10,000, but your deductible is $1,000, you’ll need to pay that amount out-of-pocket before your insurance covers the remaining $9,000.
If you decide to replace the entire roof rather than just the damaged portion, your insurance will only cover the portion related to the damage. The deductible remains the same, but you’d be responsible for any additional cost outside of the covered loss.
Deductibles can vary based on the policy you choose. Higher deductibles often result in lower premiums but mean you’ll pay more upfront if a claim is needed. Choosing a deductible that fits your budget and risk tolerance is essential.
Factors to Consider Before Filing a Claim
In some cases, you may not need to pay a deductible. For example:
- Liability coverage: There’s typically no deductible if you’re sued for injury or property damage.
- Medical payments: If someone is injured on your property, your home insurance may cover their medical expenses without requiring a deductible.
- Additional living expenses (ALE): If you need to temporarily move out while your home is being repaired due to a covered event, ALE can cover hotel stays and meals without a deductible, though you’ll still need to pay the deductible for the damage claim itself.
Certain types of coverage, known as sublimits, limit payouts for specific losses. For instance, tree removal may be capped, meaning your policy will only pay up to a certain amount regardless of the coverage limits.
Deciding Whether to File a Claim
Major incidents, such as severe damage or liability issues, generally make filing a claim worthwhile. However, more minor situations may not justify the potential for increased premiums.
If the repair cost is only slightly above your deductible, it might be worth handling the expense yourself. Filing too many claims could raise red flags for insurers, possibly leading to higher premiums or even nonrenewal of your policy. Insurers often reward clients with a claims-free history through discounts, which may outweigh the benefit of filing small claims.
What Can Lead to Nonrenewal
Insurance companies value clients who present low risk. Certain factors can lead to a nonrenewal, such as:
- Frequent claims: Submitting multiple claims in a short time could label you as a high-risk client.
- Type of claims: Claims due to negligence or lack of maintenance may lead to nonrenewal.
- Changes in your risk profile: Owning a high-risk pet or increased crime in your area can affect your coverage.
- Home maintenance issues: Insurers may use satellite imagery to assess property upkeep. Visible signs of neglect, like aging roofs, could result in nonrenewal.
- Carrier risk appetite: Sometimes insurers reduce coverage in regions prone to natural disasters, which may lead to nonrenewal even if you’ve never filed a claim.
Should your insurer choose not to renew your policy, they must provide written notice before your policy’s expiration, giving you time to explore alternative options.
Work with Wedgwood Insurance
Renewal outcomes can be uncertain, even for those with a spotless claims history. That’s why working closely with your dedicated Account Manager is crucial to make informed decisions. At Wedgwood Insurance, we help you navigate your options and ensure your coverage aligns with your needs. Contact us for guidance on when and how to file a claim, and we’ll help you make the best decision for your situation.
About Wedgwood Insurance
Wedgwood Insurance has offices in St. John’s & Corner Brook and is Newfoundland & Labrador’s largest independent insurance broker. We provide straightforward home, auto & business insurance advice.
With over 270 Google My Business reviews, experience the Wedgwood difference with expert advice from our dedicated team. We ensure that every client has the coverage that best suits their needs through upfront complimentary consultations and midterm reviews.
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