Using homeowner’s insurance after it’s purchased is not something we often know how to do. You bought homeowner’s insurance for one of four main reasons:
- To make you feel secure that your property would be protected if something happened that could damage it.
- Related, it made you feel secure that your assets were safe(r).
- If somebody got hurt at your home because of something you did or failed to do.
- The bank or loan company that issued the mortgage required it.
But, what happens if you really had to use the homeowner’s insurance?
This is your guide to using homeowner’s insurance. Print it. Keep it. File it away with your homeowner’s policy. If you can, memorize it. Just kidding about that one.
It is important to handle any homeowner’s issue in an orderly way.
The way to use use a homeowner’s insurance policy for a first-party claim (like a fire on a stove) and a third-party claim (like someone slipping on water on the floor and breaking a leg) have some similarities and some differences.
Using Homeowner’s Insurance For First-Party Claim
Suppose that you are cooking something on the stove when your daughter calls, distraught about losing her boyfriend. Your attention turns to consoling her and you forget that you had something on the stove. Grease boils over and ignites a fire on the burner and on the nearby kitchen towel. You discover the smoke and fire when you re-enter the kitchen after hanging up with your daughter.What do you do?
• Call the fire department or 911
• Turn the stove off if you can do so safely, and remove the dishtowel and anything else that is burning-but again, only if it can be safely done. If this is not possible, you may have a fire extinguisher that is safe for grease. NEVER use water on a grease fire.
• If possible, cover the fire with a metal cover-NEVER use glass as it may shatter.
• Get out of the building
• Once you are told that it is safe to go back in, take pictures of the damage as possible. This includes destroyed and smoke-damaged property.
• Call your insurance agent to report the claim and answer all questions asked. You are obligated by the insurance policy to report the claim timely. “Timely” doesn’t mean days later, because the insurance company has to investigate the cause of the fire and the extent of the damage.
Plus, depending upon the extent of the damage and the terms of the policy, the insurance company may authorize you to live elsewhere for a period of time. This is a benefit of some policies called “alternate living expense” (ALE) coverage.
If all of this happens after the agent’s office has closed, most major insurance companies have (800) phone numbers for reporting claims, especially emergency ones, that operate after-hours.
At some point you will be contacted by an “adjuster.” He or she may be an employee of the insurance company or someone that the insurance company hired. If you are concerned whether the adjuster is legit, call your agent and have him/her get confirmation from the insurance company that the adjuster is either with the insurance or has been hired by it. The adjuster will determine how much you are owed for repairs based on the terms of the insurance policy (but you might, and may have the right to, contest the amount).
Using Homeowner’s Insurance For Third-Party Claim
What we said about first-party claims pretty much applies to situations where someone claims that your carelessness caused an injury.
It is especially important that you report the claim quickly to your insurance agent or to the homeowner’s insurance company:
• Your insurer will want to assign an adjuster and take your statement and that of witnesses soon after the incident. Memories fade quickly and the insurer needs a good rendition of events. That will be used to decide whether you may have been at fault or whether to fight the claim.
• If the insurer determines that you are at fault, it will want to try to settle the claim early, and maybe, before a lawyer gets involved or a lawsuit gets filed. That lowers the expense for everybody.
• If the claim cannot be settled and the injured party sues you, the homeowner’s insurer will hire a lawyer to defend you. Cooperate with the lawyer in all ways.
What Should You Do Or Not Do?
- Cooperate with your insurer by meeting with its representatives and otherwise. But get confirmation of who they are and who they are associated with before you talk. You can call you agent or insurer for confirmation. The lawyers for injured parties often hire investigators who masquerade as being independent, but who aren’t.
- If you must socialize with the injured party (such as if he/she is a friend), don’t discuss what happened. Especially, don’t admit fault or say anything that could be interpreted as an apology. That might be construed as an admission of fault and could violate your duty to the insurance company to cooperate with its investigation and defense.
- Don’t discuss the incident with strangers or even with other friends. You never know who knows who’s listening. Don’t be paranoid, just cautious.
If you’re still confused about using homeowner’s insurance, I can help shed some light on your policy (and so can your agent). I am a retired insurance attorney and while I don’t give legal advice, I can educate people to be smarter about how their home is insured,