Budgeting Tips for Handling Exterior Damage Insurance Claims
Dealing with any damage to the exterior of your home can bring a lot of stress, especially if it’s caused by severe weather or natural wear and tear that we see over time. Whether it’s a damaged roof, siding, or windows the costs often associated with these repairs can add up.
Fortunately, if you have homeowners’ insurance, your policy may cover some or sometimes all of the damage. Understanding how to budget for the repairs and manage the insurance claims process is essential to undergoing a seamless process.
In this blog, we’ll cover some key budgeting tips to help you handle exterior damage insurance claims effectively and with your best interest in mind. When a homeowner is forced to file a claim with their insurance, many things can go through their minds. Not least of the issues we think of is the cost.
Understanding Exterior Damage Insurance Claims
The first step in managing your budget and the cost of any exterior damage is to understand what’s covered by your insurance policy. Homeowners’ insurance often will cover damage caused by events like storms, hail, vandalism, or accidents.
However, damage due to regular wear and tear or lack of maintenance is generally not covered by insurance policies. This is why we cannot stress enough the importance of an exterior inspection promptly after any storm that is impactful enough to cause any damage. Knowing our coastal climate, we see these types of storms every year.
Key points to keep in mind:
Many homeowners look at one thing when getting or renewing their homeowner’s insurance, that is the premium. That is just one factor in the policy. It is important to know what your cost in the case of an emergency will be (deductible) and what may not be included (exclusions).
- Deductibles: Most insurance policies come with a deductible, which is the amount you must pay out-of-pocket before your insurance coverage kicks in. Should you need guidance, we assist with the insurance process and are happy to help navigate and help you better understand the coverage of your policy.
- Coverage Limits: Insurance policies often will have outlined limits on how much they’ll pay out for certain repairs.
Assessment of the Damage and Acquiring Estimates
Once you’ve confirmed that your damage is eligible for insurance coverage, the next step is to assess the damage and get estimates for repairs. This is where your budgeting efforts can begin.
Steps to take:
Document the damage
When a weather event happens, it is important to document everything! Photos and videos of the damage are great references for both the insurance company and we do a great job at assisting with this during our first inspection at the property.
This is not just damage to the home, remember to document all personal property that may have been damaged as well. You’ll also want to make sure to save all receipts from any mitigation work done before getting insurance involved.
Ensure accurate estimates:
The estimate you receive from a contractor should always include all costs, including materials, labor, and any potential hidden issues that could arise during repairs if any are suspected.
A good contractor knows how to account for all necessary costs upfront and can help you navigate around any issues that should arise along the way. Sometimes though, things aren’t always predictable, and issues can come to light as they are uncovered during the restoration process.
Understanding Your Insurance Payout
Once your claim is filed and approved, it’s time to review your insurance payout.
This can be a bit tricky, as it may not cover the entire cost of repairs, depending on the terms of your policy. We specialize in ensuring that your insurance carrier pays out on a valid claim.
Our team verifies that the insurance company complies with all codes, regulations, and requirements related to manufacturing and installation.
By presenting a strong case backed by our decades of industry experience, we can get most claims approved and paid out to fully restore your property back to it’s pre-loss condition without cutting any corners.
Terms to Know:
ACV (ACTUAL CASH VALUE)
The amount of money needed to fix your home, minus the decrease in value of your property because of age or use. ACV = RCV – (Depreciation + Deductible)
RECOVERABLE DEPRECIATION
If your claim has recoverable depreciation, that is money you will receive after you have incurred the costs of the repairs.
If you have Replacement Cost Value coverage in your policy, your depreciation should be “Recoverable”.
NON RECOVERABLE DEPRECIATION
If your insurance coverage is Actual Cash Value, then the amount of the depreciation will be Non-Recoverable. This means you will not receive the depreciation amount as part of the claim, so your share of the cost of repairs will be much higher.
Creating a Budget for Repairs
Once you have an estimate for repairs and understand the insurance payout, it’s time to set a budget for how you’ll handle the remaining costs. This process can also include your general contractor of choice.
Tips for creating an effective budget:
- Factor in your deductible: Remember that you’ll need to cover your deductible, so include that in your budget right away.
- Prioritize essential repairs: If the damage is extensive and requires multiple repairs (e.g., a damaged roof, siding, and windows), prioritize the most critical repairs first.
- Include hidden costs: Sometimes, the initial estimate will not account for all the work required. Hidden costs like additional labor, building permits, or dealing with underlying issues (such as mold or electrical problems) can add up. Always set aside a contingency fund of 10-15% of the repair estimate to cover these unexpected costs.
Managing Out-of-Pocket Expenses
While the insurance payout will help cover a significant portion of the costs, you still might need to cover some expenses out-of-pocket depending on your project. Here are a few tips to help you manage your expenses:
- Financing options: If the out-of-pocket costs are considerably high, financing options like a home equity loan or a personal loan are always an option. Here at New Beginnings Construction, we offer financing plans, allowing you to pay for your home repairs over time.
- Reimbursement and timing: Insurance companies often pay in two installments—an initial payout and a final reimbursement after the repairs are completed. Make sure to factor this into your cash flow. It’s always best practice to look at a payment schedule with your contractor to help manage payments and their expectations for the type of work they will be doing.
Protecting Your Budget from Future Damage
Once the repairs are completed, it’s time to take necessary steps to eliminate the risk of future damage and avoid future claims that will strain your budget.
Tips for long-term savings:
- Regular home maintenance: Regular inspections and maintenance.
- Invest in preventative upgrades: Living in Charleston means we live in a storm-prone coastal area, considering investing in impact-resistant windows, stronger roofing materials, or storm shutters is always a great idea.
- Review your insurance policy: Make sure your policy coverage aligns with the needs of your home. If it doesn’t – consider a policy that best suits your needs moving forward to better protect your home or investment.
Conclusion
Handling exterior damage insurance claims can be a daunting task, but with proper budgeting and planning, it’s possible to manage the financial side of repairs effectively. Start by understanding your insurance coverage, getting accurate estimates, and prioritizing repairs.
Be sure to account for deductibles, hidden costs, and financing options, and always leave room for contingencies. By staying proactive and prepared, you can get your home back to its best condition without cutting any corners.
If you’re unsure about any part of the home insurance claims process or need help with budgeting and timelines, consider hiring a well-equipped contractor with knowledge of insurance claims to guide you through the process. After all, the goal is to repair your home and protect one of your biggest assets. We are happy to assist every step of the way!
