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When (and when not) to file a home insurance claim

At its most basic, home insurance shields us from financial distress whenever something goes wrong with (or on) our property. It provides coverage for a whole host of accidents and calamities, including damage from fires, windstorms, lightning and hail.

But just because something goes wrong doesn't always mean you should file a claim.

The claim process can be complex and time-consuming, and it can also be expensive if you don't know what should -- and shouldn't -- be claimed.

"On average, a homeowner will file about one or two claims in a 10-year period," says Tully Lehman, spokesman for the nonprofit Insurance Information Network of California. "Anything exceeding that number could raise concerns about the risk of the home or how a homeowner uses his insurance policy, which could result in raising your premiums. A home insurance policy is designed for catastrophic losses, not as a maintenance policy. So you need to think carefully before filing a claim."

Here are six tips for considering when (and when not) to file a home insurance claim.

Should you file a home insurance claim?

1. Does the damage exceed the deductible?

If the answer to this question is "no," then you should not file a claim, says State Farm spokeswoman Arlene Lester.

"For instance, if your deductible is $1,000 and your home has only sustained $500 worth of damage, that damage isn't going to be covered through the claim process," Lester says. "Any damage less than the deductible would be the responsibility of the homeowner.”

Even if damage does exceed the deductible, it's important to consider by how much, says Brian Boak, personal property and casualty insurance expert with the corporate insurance firm Singer Nelson Charlmers.

"If you have a $1,000 deductible and you put in a $1,200 claim, you'll only get $200 and you also have a claim on your record, which could impact your premium," Boak says. "It probably makes more sense to just pay for those repairs out of pocket. Always think about the risk and reward of filing a claim before you decide."

See also: One home insurance claim may raise your premium by 21% (Study)

2. Make sure you have coverage for the type of claim you're thinking about filing.

If you don't have flood insurance, for instance, filing a claim for water that ended up in your basement after a hard rain is a bad idea, says Aaron Nicklay, a Minnesota-based insurance agent for Farmers Insurance.

"If you file a claim for something that isn't covered, it's still going to show as a claim on your history for the next three years, even though your insurance company denied the claim because you didn't have that coverage," Nicklay says. "Your agent should be able to help you determine what is covered and what isn't, so make sure you call that agent before making a decision."

should you file a home insurance claim3. Make a calm, rational business decision. 

When things happen to our homes and our belongings, it's an emotional experience, but the decision on what to do next should be a business decision, Nicklay says.

"If it's not overwhelmingly tragic, at least wait until the next morning before deciding to file a claim," Nicklay says. "Get some advice from friends and family, have a long conversation with your agent, and get an estimate from a contractor or two. Then do the math and make your decision if a claim makes sense."

4. You should probably file any claim involving personal liability.

Personal liability coverage is the part of a standard homeowner’s policy that protects you against lawsuits if another person is injured on your property (for instance, your dog bites a visiting friend). According to Dan Weedin, a Seattle-based insurance and risk management consultant, personal liability claims are almost always worth filing.

"You never know when any liability claim can explode into a financial and legal disaster, and the insurance company requires prompt notification if something happens on your property," Weedin says.

This doesn't mean you need to file a claim if a visitor gets a paper cut or scrapes a knee. But if the injury is serious, you'll want to make sure your insurance policy will cover a whole host of costs, including medical expenses, lost income or even permanent disability.

5. Consider the number of claims you've filed in the past

If you have an unusually high number of claims (usually more than one or two in a three-year period), you may be flagged as a high-risk homeowner, which could result in a higher premium or even having your coverage dropped completely.

"Insurance companies use the number of claims you file as a shorthand way of evaluating how well you maintain your property and manage the risks of ownership,” says Tom Simeone, a personal injury attorney and part-time law professor in Washington, D.C. "This is particularly true if you have numerous claims involving the same damages, such as wind damage, flooding or tree damage. Several of the same types of claims can be a red flag."

According to Amy Bach, executive director of United Policyholders, a San Francisco-based nonprofit insurance consumer advocacy group, this is where homeowners need to do some research.

"Ask your agent point-blank: 'How much will my rate go up if I file one, two or more claims? And does it matter how far apart they occur?' Write down the answers and keep them with your insurance policy for future reference," Bach says.

6. Don't submit claims for known maintenance issues

For instance, the fence in your backyard may be old, and you know a windstorm is eventually going to blow it down. It's better to budget for replacing the fence on your own than it is to submit a claim after the damage occurs, says Jerry Becerra, founder of Barbary Insurance Brokerage of San Francisco.

"Homes are full of maintenance expenses, and insurance companies try to weed out clients that use their policies like maintenance contracts," Becerra says. "Also, well-maintained properties should get the best insurance pricing. So save your maintenance records and let your agent or broker know when you do work to your property. It may help you get discounts."

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