How To Reduce Home Insurance Claims

In the event of loss to your home — including theft and damage, you should know how much of the cost your home insurance provider pays for and how much you are liable for (after your first dollar or deductible cost). You may have been convinced to carry a higher deductible for your coverage but may also be equally shocked to find that the amount that your insurance company is willing to pay per claim is less than what you expect or need to be made whole.

It is important as a homeowner for you to learn which ways you can lower your costs and reduce the premiums you pay. It is equally important to understand what your home insurance provider will pay when a claim is submitted and how best to reduce these claims and save money.

Reducing Claims

Your home insurance pays you an amount for loss that occurs in your home. This loss, according to the International Risk Management Institute (IRMI) includes loss for homeowners, condominium owners and even tenants of apartment buildings. Coverages vary depending on the type of home being insured and include:

• Dwellings, defined as the residence premises and its structures
• Other structures — such as garages, sheds or a patio deck

The items covered by your home insurance should be checked periodically for safety and their potential to cause a loss. For example, electronics should be checked for bad cords, wiring or aging components — which could contribute to fire damage. Your home should have working smoke detectors and other alarms to alert you (and your family) of any potential for loss. The maintenance of a safe home environment will contribute to a lower potential for home insurance claims.

Choosing Between Actual Cash Value And Replacement Cost

Many times, home insurance buyers choose to cover the cost to replace a home or any items covered using what is known as the Replacement Cost method. This valuation method looks at the current market value of the item or home minus depreciation. The amount provided upon claim may be less than the Actual Cash Value replacement, which considers the cost of depreciation.

A replacement cost policy may be a better deal for those purchasing a home insurance policy looking for lower premiums (and a lower claims payout). Actual cash value may be desired, but saving the cost of claims may be of more value for some homeowners — where other savings and assets may be available to meet the cost of a loss.