It's an unfortunate fact of life that bad things can occasionally happen to your home. Water or fire damage can happen at any time, and can easily cause tens if not hundreds of thousands of dollars in structural damages and contents losses.

That, of course, is why you have homeowner's insurance. But the question that often comes up is "Should I file a claim?" It's not always an easy one to answer, and there are several factors you need to weigh before you make that decision.

The first question that comes up is whether the loss is covered by your homeowner's policy.

Generally, the policy will stipulate that the damage to the home needs to be "sudden and accidental." Some examples would be a pipe that freezes and breaks; a washing machine or a toilet that overflows; an electrical circuit that overheats and starts a fire; a wind storm that causes shingles to blow off the roof or a tree limb to come crashing down.

Things that are typically not covered include ongoing maintenance issues, such as a plumbing drip that has gone on for many months or shingles that fail because they are past their useful life. Flooding and earthquake damage are typically not covered unless you have specific coverage on your policy, and many homeowners' policies now either exclude or limit coverage for mold.

Another key question about whether to file a claim is the value of the loss. Some people view their homeowner's policy as something to be used for a loss of any size, while others view it in the same vein as a major-medical insurance policy -- it should be used only in the event of something catastrophic.

Every homeowner's policy carries a deductible amount, which is a sum of money that you are required to pay toward the value of the loss. For example, suppose your home is damaged and the contractor will charge $10,000 to repair it. If you have a $1,000 deductible on your policy -- a fairly common amount these days -- the insurance company will settle with you for $9,000, and you will have to make up the other $1,000 of the contractor's bill.

The size of your deductible contributes to your thinking on whether you want to file a claim. If you have a loss that is valued at $1,200 and you have a $1,000 deductible, the $200 that the insurance company would contribute toward the repairs would not be worth having a claim on your record.

On the other hand, a $1,000 deductible would be a minor contribution to make against a major fire damage claim that resulted in $75,000 worth of damage.

You will need to weigh the value of the loss against your own financial situation and the impact that the claim will have on your record before you make the final decision to file a claim.

Many people hesitate to file a property damage claim due to concerns about their "claim record," which is the history of claims that have been filed against a particular piece of property. In general, insurance companies look at the number of claims filed against a piece of property in the last three to five years, the nature of those claims (fire, water, storm, etc.), and the dollar value of the claims.

Different insurance companies seem to have different criteria for how they view claim history and how they weigh the factors, but all of them do take the property's history into consideration in one way or another when it comes to rates and whether you will be eligible for renewal when a policy expires.

Remember that this is typically the record of claims filed on a particular piece of property, not claims filed by a particular person (although that may be taken into consideration as well). As such, you may be filing your first-ever claim on the house you've owned for the last two years, not realizing that there had been two previous claims filed by the last homeowner. For that reason, when you purchase a previously owned home, it's a good idea to ask for a disclosure of any claims that have been filed against the home.

Filing a claim is not something to do casually, or to do on a loss that is not very much over your deductible. On the other hand, you shouldn't feel like you need to shy away from a claim if you need the insurance company's help in making the necessary repairs -- that is, after all, why you have the policy.

-----------------------------------------------------------------------------------------

Copyright © 2007, Chicago Tribune