If you have to file a home insurance claim, it is important to know what to expect when it comes to compensation. First, you should know which type of home insurance policy you have.
Actual Cash Value vs Replacement Cost Value
There are two main ways you can receive compensation through a home insurance claim: actual cash value or replacement cost value.
An actual cash value provides compensation for damages and replacements after accounting for depreciation. This means that as the value of your belongings goes down, so does the amount of compensation you can receive. A replacement cost value policy, on the other hand, provides compensation without accounting for depreciation. You will instead receive compensation to more closely replace your belongings after a disaster, although this type of policy generally costs more.
The actual amount of compensation you may receive from a single home insurance claim varies depending on the value of your home and insured items as well as the severity of the damages.
The amount of compensation you may receive also depends on how much insurance you have in comparison to your home’s total replacement cost value. If you have less than 80% of your home’s total replacement cost value in home insurance, for example, you could have gaps in your coverage. This could lead to you not receiving total compensation for the damages you originally filed a claim on.
Be sure to double check your insurance policy and speak with your insurance agent if you have any questions about how much compensation you should be receiving after a claim.
How Long Does It Take to File a Home Insurance Claim?
Filing a home insurance claim itself should only take a few minutes by calling your insurer. The actual claims process that leads up to receiving compensation may take longer, however. In general, the claims process may last around 30 days, but this depends on the severity of the incident, your insurer and other factors.
Some states have limitations on how long an insurer can take to pay out compensation after approving a claim. Remember that only approved claims will be paid out. If your home insurance claim is denied for any reason, you will not receive compensation.
A home insurance claim may be denied for a multitude of reasons such as failing to pay home insurance premiums and fraudulent claims.