How Do Home Insurance Companies Pay Out Claims? A Guide (2024)

Home insurance companies typically issue claim settlements within one month. The money will go to either you, your mortgage provider, or the contractor.

Elizabeth Rivelli
Elizabeth Rivelli
  • 5+ years writing insurance and personal finance topics

  • Auto, home, health, and life insurance expertise

Elizabeth has extensive insurance industry experience, having written for Insureon, Rate Retriever, and Insurify. She’s also finance and insurance editor for Car and Driver.

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Katie Powers
Edited byKatie Powers
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Katie PowersAuto and Life Insurance Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

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Updated December 14, 2023

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Homeowners insurance helps pay to repair or rebuild your home after a covered loss, like a fire or natural disaster. When you file a claim, your insurer evaluates the damage and determines the estimated cost of repairs. The amount you receive depends on factors like the type of damage, the type of claim, and how your policy pays out.

It’s important to understand how insurance companies pay out claims if you have a home insurance policy. Here’s what you need to know about how insurance companies pay out claims, including how long it takes to receive a claim settlement.

When should you expect to be paid after filing a home insurance claim?

After a covered loss, you should file a claim with your home insurance company as soon as possible. Most home insurance policies cover claims related to dwelling damage, personal belongings, personal liability, and additional living expenses.[1]

In most cases, the insurance company will send an adjuster to your home to assess the damage in person and determine how much it will cost to fix. The insurer then uses that information to calculate an appropriate settlement based on the situation and your policy limits.[2]

Once your insurance company investigates and approves your claim, it will provide an initial settlement. You can use the first check to make initial repairs while you wait for the final payment to arrive. The amount of time it takes to receive the money depends on several factors, including your insurer and the nature of the claim.

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How deductibles work in a claims settlement

Most home insurance policies have a deductible, which is the amount of money that you’re responsible for paying out of pocket when you file a dwelling or personal property insurance claim. When you receive the claim settlement, you’ll receive the full amount minus your deductible.[3]

It’s common for homeowners insurance policies to have a fixed deductible. For example, you might have a $1,000 deductible for dwelling insurance and a $450 deductible for personal belongings coverage.

However, some policies have a percentage deductible based on the insured value of your home. For instance, if you insure your home for $300,000 and have a 2% deductible, you’d be responsible for the first $6,000 of damage. If you live in an area that experiences hurricanes or windstorms, you might have a percentage deductible for those losses specifically.[4]

Getting multiple claim settlement checks

After filing a homeowners insurance claim, you may receive the settlement in multiple installments.

You may receive different checks for each of the following coverage types during the settlement process:

  • illustration card https://a.storyblok.com/f/162273/100x100/c922a01b77/house.svg

    Dwelling insurance

    The dwelling insurance check goes toward repairing or rebuilding the physical structure of your home. In the case of a total loss that destroyed your entire house, you’ll typically receive a settlement for the full insured value of your home.

  • illustration card https://a.storyblok.com/f/162273/100x100/32ed42213e/personal-property.svg

    Personal property insurance

    If a covered incident damages any of your personal items, you’ll receive a separate check to replace your belongings. Most insurers will write you a check for the full insured value of your belongings if an incident — like a fire — completely destroys them.

  • illustration card https://a.storyblok.com/f/162273/100x100/c61ab9bfc2/loss-of-use-2.svg

    Additional living expenses (ALE)

    If you have to temporarily relocate during home repairs, you’ll get a check to spend on ALE for a period of time, including expenses for a hotel, parking, and restaurant meals.

  • illustration card https://a.storyblok.com/f/162273/x/abffe6238f/financial-protection.svg

    Actual cash value (ACV)

    Your first settlement check following a personal property claim can cover the cash value of the items, even if you have a replacement cost policy. ACV reflects the items’ depreciation based on age and wear and tear.

  • illustration card https://a.storyblok.com/f/162273/x/c822f20cb3/billing-related.svg

    Replacement cost

    If you have a replacement cost policy, you must replace the damaged items and provide receipts to receive reimbursement for their replacement value. After submitting proof of replacement, you’ll receive a check for the difference between the ACV and the replacement cost value of the items.

  • illustration card https://a.storyblok.com/f/162273/100x100/4ec24627d2/flood-coverage.svg

    Flood insurance

    Most home insurers don’t cover flood damage. If you have flood insurance, you’ll file your flood insurance claim and receive a separate check from your flood insurance company.

Who gets the home insurance claim payments?

Home insurance claim payments don’t always go to the homeowner directly. While you might receive certain checks, others may go elsewhere, like to your mortgage company.

Learn more about who will receive the home insurance claim payment in different situations below.

Homeowner

As the homeowner, you receive any checks meant to replace personal belongings. You’re responsible for re-purchasing damaged items using the settlement from your insurer. You might also receive the money for structural repair work, but that’s not always the case.

In addition, you’ll also receive money for additional living expenses. You can spend this on temporary accommodations, such as a hotel stay and restaurant meals, during the repair or rebuild of your home.

Contractor

In the case of a dwelling insurance claim, your home insurance company might pay the contractor directly. Before the insurer gives your contractor the insurance money, you’ll need to sign a legal contract stating that the contractor will use the funds for the necessary repairs.

When your insurance company pays the contractor directly, it will manage the contractors and make payments until the project’s completion.

Mortgage lender or condo management company

If you have a home loan, your insurer will make out your claim checks to you and your mortgage lender. That’s because your lender has a financial interest in your property. If you own a condo or live in a co-op community, the insurer might also list your condo management company as an additional insured on your policy.

Typically, the lender or condo management company will need to endorse your claim settlement check before you can deposit the money and access the funds. While you might receive the check directly, you’ll need to work with your lender or the condo management company to get the necessary signatures.

Depending on your lender’s requirements, they might hold the total settlement amount in an escrow account and pay the contractors as they make repairs. Some lenders will also need to inspect the finished repairs before paying the contractor.

How to File a Home Insurance Claim

How to File a Home Insurance Claim

How long it takes for home insurance companies to pay a claim

The period of time it takes to receive a claim check from your home insurance company depends on a variety of factors, like the category of damage. Your location is one of the biggest factors because some states impose a time limit for paying insurance claims.

Some states also have time limit guidelines for non-typical circumstances, like if the insurance company needs to extend the investigation. In these instances, the company will likely need to inform you of the extended deadline.

Here are the time limit requirements in all 50 states and Washington, D.C.

StateTime Limit
Alabama30 days
Alaska30 days
Arizona30 days
Arkansas45 days
California30 days
ColoradoNo limit
Connecticut30 days
Delaware30 days
Florida60 days
Georgia40 days
Hawaii30 days
IdahoNo limit
Illinois30 days
IndianaNo limit
Iowa30 days
KansasNo limit
KentuckyNo limit
Louisiana30 days
MaineNo limit
Maryland15 days
MassachusettsNo limit
Michigan60 days
Minnesota30 days
MississippiNo limit
MissouriNo limit
Montana30 to 60 days
Nebraska15 days
Nevada30 days
New Hampshire30 days
New Jersey30 to 40 days
New MexicoNo limit
New York5 days
North CarolinaNo limit
North DakotaNo limit
Ohio10 days
Oklahoma45 days
Oregon30 days
Pennsylvania15 days
Rhode IslandNo limit
South Carolina40 days
South Dakota30 to 45 days
Tennessee30 to 60 days
Texas5 days
Utah30 days
Vermont10 days
VirginiaNo limit
Washington15 days
Washington, D.C.No limit
West Virginia15 days
Wisconsin30 days
WyomingNo limit

Actual cash value vs. replacement cost claims

Depending on your home insurance policy, you’ll receive either actual cash value (ACV) or replacement cost claim reimbursements.

ACV represents the value of your home or personal items minus depreciation. If you need to replace your personal items or rebuild your home, your homeowners insurance claim settlement check will reflect the depreciation of your dwelling or personal belongings.

With a replacement cost policy, your property damage payouts don’t take depreciation into account. That means you’ll receive a bigger settlement to rebuild your home or replace personal belongings with new ones of similar make and quality. However, replacement cost policies typically cost more than ACV policies.[5]

Remember that if you file a personal property claim, you’ll receive an initial settlement amount for the ACV of your items. Once you replace the items with new ones of similar make and quality and submit your receipts, your insurer will compensate you for the difference between the ACV and replacement value of each item.

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How to speed up the claims settlement process

The home insurance claim process usually takes between a few weeks and a few months to settle, depending on your state. However, you can try to expedite a claim settlement by taking these steps.

  • File your claim as soon as possible. Don’t wait to file a home insurance claim. The sooner you file, the sooner your insurer processes and pays out your claim. Some states also have a time limit for filing home insurance claims before the statute of limitations ends.

  • Submit appropriate documentation. To speed up the claims process, you should provide as much information as possible up front, like photographs of the damage, a police report, and relevant information about your home, like recent maintenance. That way, the insurance adjuster or claims representative can start investigating the claim right away.

  • Know what your policy covers. Home insurance policies differ. Before you file a claim, make sure you understand what coverage you have. Your insurer won’t approve a claim for a non-covered incident, so you could end up waiting for money that will never come if you don’t understand your policy specifics.

  • Make a home inventory. Having a home inventory of all your personal belongings can speed up the claim process for personal property claims. The inventory should include every item in your house and the estimated value. If you have receipts, include them in your inventory.

  • Stay in touch with your insurance company. Communicate with your insurance agent or adjuster throughout the claim process. If you haven’t received a recent update, contact the claims adjuster and see if there’s anything you can do to move the claim forward. Keep their phone numbers and email addresses handy, and find out the best ways to reach them.

Home insurance claims FAQs

The following information can help answer your remaining questions about filing claims and receiving claim settlements after a covered loss.

  • How do insurance companies send you money?

    Insurance companies typically issue claim settlements in the form of a check or a direct deposit into your bank account. But you might not receive the settlement, depending on your insurance company or mortgage lender’s rules. It’s a good idea to ask your insurance company who will receive compensation from the claim so you know what to expect.

  • How long does it typically take for an insurer to process and pay out an insurance claim?

    In general, it takes insurers about 30 days to approve and pay out an insurance claim. The exact length of time depends on the nature of the claim, your insurance company, and your state.

    In some locations, insurance companies only have a handful of days to pay out claims once they’ve agreed upon the settlement amount. In other states, like Tennessee, insurers have up to 60 days to provide settlements.

  • Can the insurance company deny your claim?

    Yes. Insurance companies can deny home insurance claims if your policy doesn’t cover the damage that occurred or if the adjuster determines that homeowner negligence caused the incident. Your insurer can also deny your claim if you haven’t been paying your insurance premiums, you don’t provide enough documentation to support the claim, or you made false statements about what happened.

  • What if you disagree with the home insurance claim payout amount?

    If you receive a home insurance settlement that you disagree with, you can submit a formal request to appeal the claim. But before you do so, it’s important to speak with the adjuster to understand how they arrived at the settlement they offered.

    When appealing the claim, you’ll need to provide additional information to support your argument, such as an independent appraisal, more photos of the damage, or repair estimates from a local contractor or construction firm.

Sources

  1. Insurance Information Institute. "Homeowners Insurance Basics."
  2. Consumer Financial Protection Bureau. "How do home insurance companies pay out claims?."
  3. Insurance Information Institute. "Understanding your insurance deductibles."
  4. Insurance Information Institute. "Understanding the insurance claims payment process."
  5. California Department of Insurance. "Residential Property Claims Guide."
Elizabeth Rivelli
Elizabeth Rivelli

Elizabeth Rivelli is a freelance writer covering insurance and personal finance. She has extensive knowledge of various insurance lines, including property and casualty, health, and life insurance. Her byline has been featured in dozens of publications, including Investopedia, Forbes, Bankrate, NextAdvisor, and Insurance.com

Katie Powers
Edited byKatie PowersAuto and Life Insurance Editor
Photo of an Insurify author
Katie PowersAuto and Life Insurance Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

Featured in

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