When to File a Claim vs. When to Cover Out of Pocket

People always say that home insurance is "better to have and not need than the other way around." The trick is figuring out when you need it. Ideally, insurance is a last line of defense. Sometimes, it even makes far more sense to cover the damages yourself without filing a claim.

Here's are some things to consider:

  • Excessive claims can actually result in policy cancellation. Your insurer is here to help, but excessive claim filings can look suspicious. They might prove that you are more of a cost risk than your insurer is able to cover.
  • When a policy is canceled, that may make it harder to find coverage with another insurer.
  • Claims filed often result in raised premiums, which is a fair trade off when we're talking about major damages, but maybe not for every cracked window and missing shingle.

There are always exceptions, but there are a number of instances where you generally want to avoid filing a claim to repair the home’s damages:

  • The damages may have resulted from poor maintenance. Your policy likely won’t cover these losses in any case.
  • You've already filed multiple claims in the last decade. If you file claims a lot, that makes you more of a cost risk to the insurer.
  • The repair costs will be less than your deductible. This is the big one. Insurance is there to save us money, so if it's not saving you money, there's not much point in filing a claim.

And of course, you always want to check your insurance policy before filing a claim to make sure that these particular damages are covered. It's worth studying your policy when you have the time anyway so that you can buy extra protection wherever you think you might need it.