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Claims are why you need insurance


What is an insurance claim and How is it paid?

An insurance claim is a request to the insurance company for payment after a policyholder experiences a loss covered by their policy. For example, if a home is damaged by a fire and the homeowner has insurance, they will file a claim to begin the process of the insurance company paying for the repairs.

What does it mean to file an insurance claim?

Filing an insurance claim is the process of letting your insurer know about a loss that you've experienced and requesting that it cover the associated costs. Traditionally, the insured party — also known as the claimant — would fill out a proof of loss form.

When not to file a claim?

Insurance companies keep a record of all filed claims, whether they're paid out or not. Not all claims will result in an increase in your insurance costs, especially if they're small, but multiple small claims within a short time period often raise rates.

Before you decide to file an insurance claim, review your policy to make sure that the damage or loss is covered. If you're unsure, you may be able to get some insight by calling your insurance agent.

For small claims, consider whether the cost of repairing the damage or replacing items is significantly higher than your deductible. For instance, if your computer is stolen and would cost $1,200 to replace but your deductible is $1,000, it may not be worth adding a claim to your record to receive a $200 insurance payout.

Ever wonder which home insurance claims are most common?

Between 2015 and 2019, these were the events that triggered the most homeowners insurance claims, according to national data from the Insurance Information Institute.

#1: Wind & Hail (34% of Claims)

This category includes destruction caused by hurricanes, tornados, and the wind associated with thunderstorms, so it’s no wonder it comes in first for frequency. Think about it: when major wind events roll into town, they often do a lot of damage – enough that repairs are greater than an insurance deductible, so it makes sense to make a claim on a policy.

But while wind and hail account for more than a third of all homeowners insurance claims, they’re actually not the most expensive, coming in at only $10,801 per claim on average (number four overall). 

#2: Water Damage & Freezing (29% of Claims)

When pipes burst or appliances leak, serious damage can result. And it happens fairly often: more than one in five homeowners insurance claims relate to this type of water damage.

In addition to being common, these claims are somewhat expensive, ranking third overall and coming in at about $11,098 on average.

#3: Fire and Lightning Damage (25% of Claims)

While fire and lightning rank third for frequency, they tend to be the most expensive claims, with a whopping average price tag of $78,838. The good news? Homeowners insurance was originally designed to protect against fires, so coverage for fire claims is easy to find.

The bad news, obviously, is that fires can destroy a lot of property fast (hence the high cost of claims).

#4: All Other Property Damage (7% of claims)

Miscellaneous property damage can take a million forms: a tree falling through your roof, a baseball shattering your window, a trash truck backing into your brand-new garage. Because of the sheer variety here, the average cost of these types of claims isn’t too informative. But for the record, it’s $6,406.

#5: Liability (3% of Claims)

As a refresher, liability refers to your duty toward other people. So when a guest is injured or has their property damaged while visiting your home, you may have liability for their medical costs or the costs to repair or replace their property.

Liability claims rank second in average cost, coming in at $29,752. The good news: most homeowners insurance policies offer liability protection.

#6: Theft (1% of Claims)

With just one percent of all claims with an average claim cost of $4,328, theft is the smallest of the big guys, you could say.

See Insurance Claim EXAMPLES Below

Garage Claim

Insured was working on customer’s vehicle while it was on a hoist and the vehicle caught fire in the insured’s garage. The customer’s car was a total loss and insured’s carrier paid $40,000.

Insured was working on customer’s vehicle that was left in neutral. The vehicle rolled out of the garage into the parking lot and into incoming traffic. It hit a pickup truck and a man on a motorcycle. The claim had Damage to customers vehicle $20,000, damage to the pickup truck $8,000, Motorcycle Damage $5,000 and Bodily Injury damage to the driver of the Motorcycle $30,000.

Customers Vehicles were parked beside the garage on the insured’s property within a secured area. The vehicles were all vandalized. Equipment was stolen out of the vehicles resulting $12,000 Property Damage.

Small Business Claim

A women slipped on a raised portion of sidewalk at insured’s premises, fell down and broke one of her legs also incurring a spinal injury – This claim for bodily injury was $50,000.

A woman fell in parking lot when she tripped over a wheel stop. She broke her arm and caused damage to her rotator cuff resulting in a $60,000 claim.

Man tripped over a rug in an office, fell and broke his leg resulting in a $15,000 bodily injury pay out.

Homeowners Claim

Insured had a fence around pool which was poorly maintained and a young child got through a hole in the fence and went into the pool and drowned. The liability pay out was the policy limit of $300,000.

Grandfather was cutting tree on property. A limb from the tree fell on a visiting child and $300,000 was paid out in bodily injury for the visiting child’s injuries.

Lady came to home and she slipped on balcony which fractured her wrist and caused injury to her leg. The resulting bodily injury claim was $30,000.

Lightening Stuck the water pump causing the pump to leak and entire bottom floor of the insured’s home was flooded resulting in $52,000 in property damage to House.

Grease Fire in Kitchen cause $71,000 to building and contents of home.

Rats ate into electrical wire in the garage which caused a fire. The house severely damaged by fired and $200,000 property damage claim was paid.

Contractor Claim

Former employee of contractor came by to visit job site of contractor fell off roof. The bodily injury resulted in a $50,000 claim.

Hotel Claim

Insured owned Hotel – The insured kept a dog in the hotel lobby. The dog bit a small child in the face. A $50,000 bodily injury claim resulted.

Hotel caught fire from a heater causing damage to 7 rooms resulting in a property damage claim of $250,000.

Restaurant Claim

Person walking up ramp at restaurant which was not well lit or marked, the claimant fell causing bodily injury. The carrier paid $50,000.

Workers Compensation Claim

Condominium housekeeper was walking up the stairs and slipped. She sustained a back injury. The workers compensation claim incurred was $90,000.

A worker cut finger on the job and was treated and released from the emergency room with a few stitches. The worker later got a staph infection and had to be hospitalized. The bodily injury on this minor accident ultimately resulted in a workers’ compensation claim of $50,000.

Leased Space Claim

Insured had a tenant that placed a lit cigarette in a trash can. The entire building burned which resulted in a fire damage claim of $400,000.

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