When to use the home insurance policy

Not always when damage occurs at home it is convenient to use our insurance policy. Find out why, and learn when it would be best to make claims and in which cases you should avoid them.


As explained by David Reiss, professor and director of research at the Center for Urban Business Enterprise Initiative at the University of Brooklyn Law, it is important to think carefully about the consequences of making a claim for a small loss.


We ask you several questions that you should consider when deciding whether or not to claim.

Is the payment worth the effort?


He thinks that, in general, the homeowner will be responsible for the first part of the loss, in an amount equal to the policy deductible. “That would mean that if you have a $ 1,000 policy and the damage that has been done was 1,500, the insurance company will pay you, at most 500,” said the expert.


Many claims, policy canceled!


After the second claim onwards, many companies could cancel your policy. Therefore, Reiss recommended finding out this before processing it.


He thinks that, as Greg Isaac, president of the CoverHound insurance site, pointed out, these companies tend to look at the frequency of claims as much (or more) than the amount of the loss. This implies that, if you make two really small ones, you would have the same possibility that they would cancel the policy as if they had been losses of thousands of dollars.


After the first claim, will the cost of your policy increase?


It will depend on how your company is managed and your claims history. While some companies will not raise your ‘rate’ after the first claim, they could increase it significantly (or even cancel the policy, as we warned you) after the second, Isaac said. In addition, other companies may also charge you for each time you claim.


It could also happen that it depends on the cause: if it is for something that could not be prevented, such as damage to the home caused by the storm, your claim may not affect the cost of your policy. But a judgment of responsibility for a fall at a party in your home, could result in a considerable increase or cancellation of the policy.


The Golden rule


Isaac summarized that the ideal would be the following: save the insurance policy for when you really need it (read, catastrophic losses), and take care of the minimum damages in your home. Thus, you will keep your cost low and you will be covered when you need it most

Updated: November 29, 2019 — 12:27 pm

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