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Homeowners Insurance Claim An In-depth Explanation

Hi this is Jeremy Goodrich owner of
Shine Insurance Agency and creator of Make insurance Simple where we're trying
to change the way you feel about insurance by helping you to understand
it whether you purchase your insurance policy from us or not.  This video is all
about home owners claims so whether you're
experiencing one right now or you just want to be prepared for if one happens
I'm gonna walk you through the important part of what you can do to make your
home owners claim as simple as possible. So let's dig right in! What we're gonna learn this video is pretty
simple.  We're gonna start with property versus liability, two different kinds of
coverage that exist on your homeowners policy.

Then we'll talk about what to do right
when a claim happens.  Your first decisions, the first things to do. We'll talk about a super important
person in the process>  the claim adjuster, and finally we'll walk through how a
claim goes and you can see the different parts of it and who does what, those
kinds of things.  First off though, a tiny disclaimer.

This video is meant to
provide very general advice.  I am in no way confirming details about your
specific insurance policies cause I. Don't have them in front of me.  Those
conversations should happen between you and your insurance advisor.

So pretty
obvious but just wanted to throw that out right at the beginning. Ok let's talk first about property
versus liability, some basic insurance education here. Property coverage is
when bad things happen to your stuff.  In a homeowner scenario that's your house,
your stuff inside your house, your other structures (your shed, your detached garage,
pool, any of those kinds of things.

That is your stuff and that is Property
Coverage.  Liability Coverage is when bad things happen to other people because of
you.  So something bad happened to somebody, they got hurt or whatever.  That is your
liability and that's why you have Liability Coverage on your auto policy,
in your homeowners policy and, if you're a business owner, you have general
liability coverage as well.

This is coverage for when bad things happen
to other people because of you. So I wanna stop right now and I just
want to say, if you want to learn about liability claims please check out the
Homeowner's Liability Claims video on our YouTube channel.  You can click
right here to go watch that video right now.  I didn't  want to make this video too long
and so the rest of this video is all about Property Coverage, coverage for bad
things that happened to your stuff but I.

Do have a video about Liability Coverage,
bad things to happen to other people because of you and you can watch that
right there.  Alright…So you had a claim happen. Maybe you had a fire.  Maybe a tornado
came through.

Maybe you had water damage, a burst pipe for example.  Those are the most common ones but
there's lots of different kinds of claims.  Something bad has happened to
your house.  What's the first thing to do? Well, I'm gonna start with the no-brainer,
you know, call 911.

If your house is on fire or something like that it's not the
time to worry about your insurance coverage. Right now you want to make
sure that you mitigate the damage and that you get the professionals in to take
care of it.  So you're gonna call 911 and that's the first thing your gonna do.  If
it is safe, stop further damage.

The best example of this is you should
know where your water shutoff valve is in your house. Oftentimes water claims become much much
worse because someone didn't know how to to turn off the water in their house and so
it continued to pour out of the burst pipe and caused lots lots more
damage.  So if it's safe go ahead and stop further damage.  That
could be turning off the main water pipe in a fire situation, that could be
getting your fire extinguisher and attempting to put the fire out.

Ok, so
call 911 at the very beginning, obviously, and then if it's safe go ahead and stop further damage with
all those things I just said.  Finally, make sure you document everything.  So
take pictures, take videos, make sure to have evidence of what happened because the claim adjuster that I'm about to talk about is going to ask
for evidence and the more you have, the better off you're gonna be throughout
the claims process.  Ok so now you're gonna call a remediation specialist.
This is someone who is going to clean up the damage.

A fire and water damage service
specialist you probably have one in your town if you don't you have one in the
next closest larger town and you're gonna hire these folks to clean up the
mess.  But I want to point out right now a rookie mistake.  Something that people do
all the time and it totally makes the process so much worse.  That is hiring
the wrong restoration service.

These folks not only come in and clean up your
house but oftentimes they are going to become the general contractor who helps
to rebuild your house as well or fix the damage that happened.  So you're
gonna have a relationship oftentimes with these restoration folks from the
very beginning to the very end of your claim experience.  They're gonna be
doing the work and so if you hire the wrong folks it really really creates a
problem.  What I suggest is to ask your insurance agent who they have used

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Insurance agents have relationships with restoration folks and
they know who's good and who's not.  If you don't have an insurance agent go out
to Yelp, go out to whatever reference spaces out on the web and make
sure that the people you hire get positive reviews from other local folks
in your area.  If somebody showed up and knocked on your door and you've never heard
of them before or they don't have any reviews online, that's a red flag and they
create could create a serious problem for your process.  So definitely hire the
right restoration folks based on referrals.

Ok so when everything is
settled and you know it's not an emergency anymore, it's time to call your
insurance company.  That's your insurance agent or maybe that's your insurance
company itself. You're gonna make a phone call to them and tell them about
the claim.  Pretty simple right and when you call in you'll likely get a
general person, someone who doesn't necessarily have expertise in the claims

They may not be able to answer a whole bunch of questions for you but
they'll be collecting information from you.  The information you want back from
them is is fairly simple.  You want a claim number, this is going to drive a
lot of the future conversations you have about this claim. You would love to have an adjuster's
contact information.

This is a person so they would say "Betty Sue" and they give you her phone number.  A lot of times they will not have
an adjusters contact information yet in that first call.  But you can ask for it
and see if they have it and if they do that's super awesome.  Then ask when you can
expect a call from the adjuster.

I always say in claims
experiences you want to know when the company is supposed to do the next thing.
Then if they don't do it at the time they say they were going to do it, that
is when you contact them and say, "hey you said you would do you know so and so at
this time it hasn't been done yet. I was just wondering how things are going."  That
way you don't come off as being really needy or any of that but the same time
you make sure that you're being taken care of like you should.  So this is
the first opportunity to do this: asking when you can expect a call from the adjuster.
If they say in the next 24 hours don't call the company two hours from
now and say, "hey I haven't got a call from the adjuster. What's going on?"  Give
them the time that they said it would take but don't give them more.

If that phone call doesn't come in the 24 hours that they say
they're going to call in, that's the time to give them a call and say, "hey I
need to speak with the claims adjuster." Speaking of the claims adjuster, here is
our claims adjuster.  This individual is your new best friend.  The reason why
is this is the company's representative that makes claim decisions.  Decisions
like whether certain things are covered.

How much coverage there is.  So this person is super important and a super important relationship to take
care of.  That's why I say be nice to this person.  It is amazing to me how many
people are unkind to their claims adjusters.

The claims adjuster from
the company calls me and says,  "hey Jeremy you know this person is is really being
a jerk and I'm trying to help him out but here's the situation…… And I gotta tell you, life is like this, I
mean this is a general life lesson. You're never going to get the best from
someone if you're treating them poorly. So you know be nice to this person.

have they have a huge role in the process. Ok this next slide that I'm gonna throw up here
is one of the most important pieces of this video.  This is what creates a visual for you that really explains exactly how a claim happens.
So you have a claim happen. I've got the house with fire as the example here.
There are two parallel paths that happened throughout the process.

first involves the insurance company Your  insurance company is obviously
going to be involved if there's damage to your house but the other one you
don't think about as much is the contractors. I mentioned the remediation
folks at the beginning of this video and they may become your general contractor
throughout the process or maybe you have someone you know who does framing or
does dry wall  or does different kinds of plumbing or whatever.  If you
have those folks you are usually, with most companies, allowed to hire whomever
you want. But most of the time the remediation folks play that role because
it's easier and it works out better.

So there are two parallel paths the insurance
company and the contractor. Let's start with the contractors first.  What is their job?  Well,
their job is to do the work. So they are going to clean out the damage, fix
everything that was wrong, and then rebuild whether that is putting
carpet back down because it got wet or framing a room and drywalling it because
it burned or whatever.

It is the contractors that are local t0 you are
going to be doing the actual work.  It's super important to understand because
most people think it's the insurance companies.  They say, "hey why isn't the
insurance company getting this done?"  It's because the contractors are the one that
are actually doing the work and the contractors are oftentimes what gets
hung up if problems happen in the homeowners insurance situation it's often the contractor who are the ones that are taking the longest.
Because you know they have the work to do and they have to get the materials and
the people and all that kind of stuff. The insurance company is also involved
but their role is fairly simple, they provide the money to fix the damage that happened.
That's really they're only role.

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You know they're going to provide the
money and the contractors are going to do the work.  The contractors are going to be the
ones you're talking with the most, what color you want the paint, you know, all
those kinds of things,  The insurance company is going to provide the money.  Two
parallel paths are super important to understand.  Ok so what are the some of
the things that we need to think about while the property claimis happening?  Well
the first and most important is to determine if there is coverage.

The second is that, if there is coverage on the
policy, the insurance company's going to pay to make you whole again.  Lets talk about determining if there is coverage.  Here's how it's going to work.
The adjuster will likely visit your home and take photos.

Sometimes they don't
come out but oftentimes they do.  They're going to come out and take a look at
what happened.  They'll asking a lot of questions.  They'll ask you how it happened,  when
it happened, what started it, all those kinds of things.

Finally they are going
to create a report that defines the Cause of Loss.  The Cause of Loss is what
drives insurance policies. What made the claim happen?  What was the root problem?  If a tree fell what made the tree fall.  Did someone with a chainsaw  cut that tree down?  That's very different than if a wind storm came
through and knocked that tree down.

So we're looking all the way back to the very
beginning even if it's a domino effect of things that happened.  What was the
original thing that happened? That's called the Cause of Loss.  Why is the
cause of loss so important?  Well when you look at the cause of loss plus the terms
of your insurance policy (which is different for all homeowners policies)
you are going to get whether your loss is covered or not covered and that's the
heart of it all. Whether it's covered or not covered has
everything to do with the cause of loss plus the terms of your insurance policy.
So many times the terms of your insurance policy is just all these legalese stuff inside of your insurance policy.

that's where some trust happens when you hire your insurance agent and choose a homeowner's policy.  You're
trusting them that it's a solid policy and you're certainly gonna find out in
these kinds of scenarios.   The cause of loss plus policy terms equals
covered or not covered. Let's talk about how we figure out
covered or not covered.

There's basically three different things that could happen.
Here.  The adjuster could conclude that the entire loss is covered.  That's the
best-case scenario, the entire loss is covered. They could conclude
that parts of the loss are covered.

The best example here is if a valve breaks in your
house and that valve was rusted out or something like that and the water
bursts everywhere. A lot of times they say well you know
well the valve was old and faulty so we're not going to replace the valve but we
will replace all the damage that the water did after leaving the valve.  So if
it's a $10,000 claim they're gonna pay $9,000 and not paid the…Wait that's a
bad example but you know, sometimes they they won't cover certain parts of the loss
because of the scenario and they will cover others.  Then, finally, the loss  is deemed not covered.

They determined that the cause of loss combined with the
policy terms showed that the lost was not covered.  So three different ways that
things can go.  Oftentimes it's the entire loss, sometimes parts are covered & part
aren't and other times it's not covered it all. Ok so how does the coverage work?  Well
first of all you have a deductible.

You chose a deductible.  Oftentimes on
homeowners' policies I suggest a one thousand dollar deductible.  That's to keep your
premium down.  Some people have $2,500, $5,000 deductible and other people have
$500 deductibles.

To me $1,000 deductible is proper most of the time.  So you are going to pay the
first thousand dollars associated with this claim. So if the claim is less
than $1,000 or if the damage is less than $1,000 then there won't be a claim
because you won't you won't have gotten to your deductible limit.  If it is above
that then you'll pay the thousand bucks the insurance company will pay the rest.

Replacement cost versus ACV.  There are lots of
videos out there about this.  I've created a couple so I'm not going into big details
on this topic but basically you want a replacement cost policy.  This is going to
replace things properly.

ACV is going to subtract for depreciation so for everything
that needs to be replaced the insurance company is not going to be giving you
the complete amount of money that you need to replace that.  So hopefully you
have a replacement cost policy and not an ACV policy.  If you want to know more
information about that check out the other videos on our channel.  Finally
as I mentioned before, Pay to Make You Whole.

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The insurance company is going to
pay to replace the things that you lost. If that means rebuilding your house
completely then we're going to rebuild your house completely up to the policy
limits.  If you have a policy that insures you for $180,000 and it's gonna cost
250,000 to replace your house lots of insurance
policies stopped at $180,000 you're going to have to pay the extra $72K to
get your house totally completely rebuilt.  Now many many solid policies
have built-in systems to help deal with that, for example Guaranteed Replacement Cost or
Extended Replacement Cost.

But as best we can, we're going to pay to make
you whole up to the policy's limits.  We're not gonna pay more then your policy
provided for you, we're gonna pay to make you whole.  Ok, so what
things are covered?  Just a quick reminder your house is covered, your stuff is
covered, the things inside your house (with some limitations including jewelry,
furs, firearms, money) personal property has lots of rules around it but in
general your stuff is covered,  other structures (this could be a pool or
detached garage things of that nature) and finally oftentimes people does think
about this but we're gonna pay to put you in a hotel for a period of time or a
long-term living situation if we're completely rebuilding your house.  So
additional living expenses or loss of use is paid by your insurance policy
often times as well.

So those four things are what are going to be covered in a
property claim.  That was quick, didn't get too deep
into into the details but gave you at least a basic understanding. We covered
property versus liability.  Property coverages for your stuff.

coverage is for bad things that happen to other people because of you.  We talked about what to do first , make sure you call 911, stop the problem if you can, and finally document, document, document.
The adjuster is your best friend in this process, the person who will be making
decisions at the insurance company about whether coverage is there or not there,
What kinds of coverage exists, how payments get made, they cut the checks,
this person is important.  So be nice to them.  And how a claim goes down.

described different coverages and how you can see them, reminded you about your
deductible and talked a little bit about what things are covered. Want to tell you real quickly about
other sign videos: aOur new home buyers guide, if you are buying a new home it's a
super super valuable video, very similar to this one in the way it's structured
but really tells you a lot about the new homebuyers process.  I definitely
suggest that video.  If you've never heard of a personal liability umbrella,
additional liability coverage above and beyond liability coverage on your
home and auto policy, this video will really help you with that.

Finally if
you're into some funny stuff, our riding lawn more fails video is pretty
funny.  Some people making pretty poor decisions with riding lawnmowers.
Finally, what's next? As always the last step in our videos is to please, if you
haven't done so already, subscribe to our YouTube channel.  We create tons of great
videos just like this one.  Our attempt is truly to help you understand how
insurance works or like with the new home buyers guide just to really educate
you about something financial or with the the lawn mower
riding lawn mower or fails just to try and be funny and have a good time.

So we
try and enjoy ourself on our channel here and we'd love for you to be a part
of it.  Finally, if you could share this information with your social media world. Whether that means Tweeting a link to this video or liking our Facebook Page, Anything that you can do to share this
information I always say good information is only great when you share it with others.
If you feel like this video did that for you please go ahead and share it with
other folks so that they can experiences it as well.  I hope you got
a whole bunch of information out of this video.

Ihope I didn't move too quickly.  If you
have questions please throw them down in the comments section I answer every
question that I see on there and I'm happy to answer yours.  If you thought
this video is the worst thing you've ever seen in your whole life I hope you'll
put that down in the comments section as well along with sharing why you thought
it was that way so that I can make the next one even better. Ok until the next time, have a wonderful

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