Homeowners Insurance: Understand the Settlement Process for Claims

By Compuquotes Team on May 2nd, 2008

Homeowners Insurance

Purchasing homeowners insurance is insurance against something bad happening to your home. While we all hope that nothing will happen, it's important to understand the process of claiming a loss on your homeowners insurance should something happen to your home. If your home needs to be repaired or rebuilt, or contents (things you own) need to be replaced, you will have to work with your insurance company to determine how much you are entitled to receive for your claim. Let's take a detailed look at the claim settlement process for homeowners insurance losses.

One of the most difficult things of a homeowners insurance claim is determining ownership of property and its value, especially after theft or a loss. This is simply due to the fact that there is nothing to view to help determine value and possession (that you actually owned it).

Here are a few things that will help the claims process if you have a loss:

Invoices, purchase orders or receipts for the items.

Photographs of the things you own with a family member and item.

Charge account/credit card records

Credit card slips

Canceled checks

Registration papers (such as for boats, guns, etc.)

Chattel mortgages

Declarations from customs



Instruction manuals

Tax records

Shipping receipts, bill of lading, tariff receipt

Testimony of other people that you owned the property - these can include:

  • Delivery people
  • Movers
  • Repairmen/contractors
  • Cleaners/servants
  • Neighbors
  • Relatives
  • Friends
  • Appraisers
  • Sales associates
  • Vendors
  • Donors
  • Landlords
  • Insurance agents

If you have a loss in your home, the most important thing to be able to do is prove that you own the items you've claimed. You will need to work with the appraiser/claims person in establishing the age of the items and their value.

Most homeowners insurance policies cover personal property on actual cash value basis, which is the replacement cost of your items minus depreciation. However, some homeowners insurance policies and endorsements (add-ons to a policy) will cover the actual replacement cost where depreciation value of your items isn't a factor.

When you are purchasing your homeowners insurance policy, this is one of the key things to talk to your agent about - how your items will be replaced (actual cash value or replacement cost). It will really depend on the agent, company and your own opinions. Replacement cost insurance for your personal property is often a little more expensive; however you need to weigh the pros and cons of spending this extra money. If your items in your home are not very new, the money you receive to replace them may not be nearly enough to actually purchase anything useable. In these cases, you may want to consider upgrading your homeowners insurance policy to replacement value instead of actual cash value.

When you do purchase new items for your home, take a picture of the item with you or one of your family members holding the item or being in the frame with the item. You should store these photos, along with the receipts or photocopy of the receipts in a safe place, such as a fireproof box or safety deposit box at a bank.

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