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Dave Ramsey says: Weigh options before filing homeowner’s claim

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Dear Dave,

How do you know when you should file an insurance claim on a homeowner’s issue, versus just dealing with it and paying cash?

— Ben

Dear Ben,

Basically, it’s when you begin to feel the pain financially.

Let’s say you have a $1,000 deductible on your homeowner’s policy. If you have an $1,100 issue, just pay the $100 out of pocket and don’t mess with it. But let’s say you have the same deductible and a $2,000 problem.

Depending on things like your overall financial situation, the value of the house, and the cost of the insurance policy, that might just get you to file a claim.

Somehow, lots of people get the idea they can make money on insurance process. You don’t.

Insurance companies make money, and consumers pay insurance companies. You don’t make money on insurance in the long-term.

You may have a situation, once in a blue moon, where you come out ahead on a transaction versus what you paid in. But over the scope of your life, you don’t make money on insurance companies.

The point is this: If you turn in the claim, you’re going to experience a rate increase or cancellation somewhere — at some point — that offsets it.

I only turn in substantial claims, meaning claims that are far above the deductible.

— Dave

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