What Does Halloween Have to Do With Insurance Deductibles?

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During the Halloween season, pranks like an egged car or a broken window from a smashed pumpkin often become more common. If any of these, or another damaging prank, happens to you, you may want to consider whether or not to make a claim on your auto or homeowner’s insurance policy if your home or car suffers some damage due to Halloween tricks. Here’s a guide to help you decide.

Know How Your Deductible Applies to Halloween Prank Damage

Every homeowner’s insurance and car insurance policy comes with a range of deductible amounts from a few hundred dollars to well over $1,000. That deductible is the portion of the cost of the repair or replacement of your damages you must pay before your insurance policy pays the remainder of any claim (and deductibles generally do not apply to the liability portions of your policies), according to the Insurance Information Institute, an industry-funded consumer education organization. A deductible applies each time you file a claim and is “deducted” from your claim amount so you don’t have actually pay the deductible to the insurance company.

“Because of the way deductibles work, it makes sense to be aware of your deductible amounts for each policy,” Michael Barry, vice president of media relations for the Insurance Information Institute, said. “Then, if you experience damages on Halloween, weigh the cost to repair or replace any damage against that deductible amount you’d need to pay out of pocket and whether that would cause your household financial distress.”

Should You File a Claim?

Even though policies generally cover your home and car for accidents, vandalism and theft damages (the category many Halloween pranks fall under), Barry said if you can financially absorb that amount, it’s usually not worth it to make a claim.

Damages to your home or car that may occur on or near Halloween — like toilet-papered trees or smashed pumpkins — can be more of a messy inconvenience than expensive to repair. When it comes to these smaller damages that may cost less than or slightly above the deductible amount to repair, Barry suggested keeping an emergency savings fund to cover these smaller repair costs yourself instead of making a claim on your insurance policy.

Keeping that insurance deductible amount in an emergency fund can help protect you from resorting to a credit card to cover any out-of-pocket damages and from making small claims that could cause premium rate hikes.

But if the damage is much greater than your deductible — such as a Jack O’ Lantern that causes a house fire, eggs on your car that destroy the paint or a serious burglary — that’s when you may want to resort to your insurance to help you with the repair and replacement costs.

When Making a Claim Can Cause a Rate Hike

According to the Department of Motor Vehicles, car insurance rates can go up after you file a claim, although many insurance companies offer “accident forgiveness” as an additional perk so this doesn’t happen because of one accident. Rate hikes are usually reserved for collision claims or claims involving dangerous behaviors (like drunk driving), according to Barry. Either way, you want to be sure it’s worth it to file a claim for damage to your car from Halloween pranks, as making several claims on your auto insurance policy can raise your risk profile. This is something insurers use when it comes time to set your premiums.

When it comes to homeowner’s insurance, Barry said it’s fairly similar to auto insurance. Homeowners who file more claims may be seen as riskier to insure, so it’s important to keep this in mind during your decision process.

“Several damage claims in a short time period such as a year or two could trigger a rate hike, depending on your risk profile, your insurance company and your claims history with the company,” he said.

If you’re considering switching providers, it’s important to know that your claims are only part of what they may look at to determine your rates. Some providers also review at a version of your credit reports, so it’s a good idea to know where yours stand before shopping around. You can see an overview of your free credit report, updated every 14 days, on Credit.com.

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10 Events Homeowners Insurance Doesn’t Always Cover

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If you own a home, you most likely have homeowners insurance (it’s typically required to secure a mortgage). You know your insurance policy covers your home and the possessions inside it in the event of a fire or theft, but you may not realize there are many things which are not covered by your homeowners insurance.

Before you have a claim, it is important to know what your insurance provider will and will not cover so you can alter your policy or budget accordingly.

1. Flooding

Flooding is usually not covered under a standard homeowners insurance policy. If you live in an area prone to flooding, you may have already secured flood insurance. However, many people who do not live in this type of area do not have this additional coverage. You can visit the National Flood Insurance program to learn more about adding this to your insurance line up.

2. Earthquakes

If you haven’t experienced an earthquake in your area, you probably feel you do not need to worry about earthquake coverage. However, there have been more instances of this in less typical parts of the country, like the one that hit Oklahoma recently.

If you have a basic policy, it likely will not cover this type of damage. Therefore, you would need to take out additional insurance to cover your home. This is usually only an issue in areas which face higher risk, but you can ask your agent about this and decide if you should purchase it or not.

3. Animal Bites

Many times, basic homeowners insurance does not cover any sort of animal bite. If you have pets, you need to check your current policy to see if you are covered or not. If you are not, find out what you can do to cover yourself.

4. Sewer Backups

If your sewer backs up into your home, a standard insurance policy may not cover you. If you live in a newer home, this may not be as much of a concern. However, if your house is older, or you have a septic tank, this could be more of an issue. Ask your agent about adding in additional coverage.

5. Sinkholes

With more and more stories of these instances hitting the news, it is something you need to consider. If you reside in Missouri, Texas, Florida, Alabama, Kentucky or Tennessee, you are more likely to have this potential issue arise. There are riders you can add to your policy to protect your home, should this happen to you.

6. Termites

In the majority of cases, the damage caused by these little bugs is not covered and the only way you can cover these costs is by paying out of your own pocket.

7. Simultaneous Events

If you happen to suffer severe wind damage and then your home floods, you may not be covered. The reason? Flood is not covered under your policy. It is what the insurance world calls “anti-concurrent causation.” This is when two events happen at the same time — one of which is not covered under your policy.

8. Burst Pipes

While many times a burst pipe is covered, there are times when it may not be. For example, if it is due to homeowner negligence, such as not leaving the heat on when away on a winter vacation or forgetting to drain a pipe, then it may not be covered. Make sure you take the necessary steps when you are going to be away to help prevent damage. And consider talking with your insurance provider to see what your policy coverage entails.

9. Mold

Mold is horrible and, not only is it ugly, it can actually make you sick. You might check with your provider to see if mold damage is covered by your current policy. If you ever have water in your home for any reason, it’s a good idea to get it cleaned up as soon as possible to help prevent mold growth.

10. Identity Theft

This is actually slowly changing with many companies, but some do not cover the problems that arise because of identity theft. Some companies offer optional additions for your policy, which can cover things like the cost to get your credit restored. (You can see where your credit currently stands by viewing two of your credit scores for free, updated each month, on Credit.com.)

No matter which company you use for your insurance, make sure you talk about these instances and add in those riders or consider purchasing additional insurance as needed. Make sure you take the time to read your own policy, or go over it with your provider, to help you avoid any surprises.

Image: Marilyn Nieves

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