Homeowner Insurance Claim Pitfalls & How To Avoid Them

Common homeowner insurance claim pitfalls and how to avoid them.

Roughly 5% of all homeowners will file a claim with their insurance company this year. If you believe you might suffer financial damages in the future, it is best to learn all about common homeowners’ insurance claims, mistakes one might make during the claims process, and tips on how to avoid them.

The seasoned insurance agents at All in One Insurance Group are here to help. As always, we present fresh, unbiased, peer-reviewed information so that consumers can navigate insurance issues easily. Our articles are meant to educate and entertain, and hopefully, you will finish this piece with a better understanding of insurance claim pitfalls.

Common Homeowners’ Insurance Claims Mistakes & Tips On How To Avoid Them

Keep reading to learn about the top common homeowner’s insurance claims errors and tips on how to avoid them.

Reporting Small, Unnecessary Claims

Arguably, the most common and costly mistake made by homeowners is calling in smaller, unnecessary claims. So, before calling in a claim for reimbursement, consider your deductible and think about your claims history.

A history of too many claims will cause your insurance costs to increase. Sometimes, a claims-heavy insurance history can make it challenging to find insurance from a new provider, and claims stay on your record for many years.

To avoid this common insurance claim mistake, get several quotes for repairs and compare them to your deductible cost. Remember, the deductible is the amount a homeowner will pay for the repair, and insurance will kick in to pay the rest.

If, for example, your deductible is $1,000 and the repair to your home will cost $1,200, it is best to leave insurance out of the arrangement. Minimize your claims history to keep your prices low.

However, not every insurance claim is small. In fact, the average claim in the US is $18,000. So, keep reading to protect yourself from more common homeowners’ insurance claims mistakes.

Failing To Protect Property From A Loss (Before Making A Claim)

Insurance companies expect homeowners to protect their property during events that could lead to claims.

For instance, imagine an intense storm in your neighborhood that knocks down trees and power lines, and brings lightning strikes, which start fires. Imagine that a fallen tree strikes your home, and the entire front façade of the home, plus front windows, are crushed.

Assuming you are in town at the time of the storm, your insurer expects you to do anything possible to mitigate the damages from the fallen tree limb. (In legal language, to mitigate means to reduce damages or make them less severe.)

If it is safe to do so, you should:

Use tarps to cover open areas of the home

Move expensive furniture or area rugs out of the rain

Sweep up broken glass or dangerous debris

Use sandbags to reduce water flowing into the home

Move your children and visitors to another part of the home, or to another, safer location

It helps if you can take cell phone photos of your efforts to prove you are mitigating the damages as best as possible.

Now, human safety is always paramount. If flood waters are rushing into your home, or a lightning strike lights it on fire, do not stay around to set up tarps. Use common sense.

This leads nicely into another common homeowner insurance claim mistake, which is poor record-keeping.

Failing To Document Costs Involved In An Insurance Claim

Too many insureds fail to provide enough evidence to their claims adjuster. They miss out on funds they are owed for their loss, and this is a widespread mistake that could be easily avoided.

Imagine that horrible lightning storm, falling trees, and a house fire again. A sensible homeowner does their best to mitigate the damages and moves their family into a hotel, so they must keep a record of those costs.

Your insurance company will reimburse you for things like:

Most standard HO policies also include “loss of use” coverage. In other words, if you are unable to live in your home because of the covered event, the insurer will pay for your hotel or apartment. They will also cover your meals at restaurants, and even personal items, like replacement toothbrushes.

However, homeowners must prove these costs to collect the funds. So, keep every receipt related to this claim. If things are hectic, take a cell phone photo of the receipt, and be sure it shows the date. Ultimately, you will present these records to the claims adjuster as the insurer works through the claim.

This connects us to the next homeowner insurance claims pitfalls and errors, and tips to avoid them, which deal with claims adjusters and the claims process.

Failing To Meet With Or Respond To Insurance Claims Adjusters

Another claim mistake we see often in this business is a failure to meet with or work with claims adjusters. Claims adjusters work for insurers to help them understand the nature of a loss, appraise repair costs, and decide how much a claim is worth.

Our best advice is to work with them, actively and politely, throughout the claims process. Provide all the receipts and photos of your loss and continue to do so as new costs arise (like mold, for instance, which may or may not be covered).

Meet your insurance claims adjuster at the property when it is safe to do so, and make sure they notate all damages. Ensure they notice odors, too. Odor removal, associated with smells of smoke damage, mildew, mold, and so on, may all be covered by your HO policy.

If we imagine, once again, the ferocious lightning storm, we can imagine a whole neighborhood enduring significant damage. In these cases, claims adjusters will be overwhelmed with work, and insurance companies may hire extra contractors to help with claims.

While you should work with adjusters, do not simply agree to every statement they make. You may need to stand up for yourself throughout this process.

Failing To Question Insurance Claims Adjusters

As licensed insurance agents, we appreciate claims adjusters. They are highly educated people with advanced technology. Their job sometimes puts them in harm’s way, and they deserve our respect. However, adjusters are human beings, too. They can make errors, especially when overworked at a major regional situation.

Software Challenges In The Appraisals Field

The tools used by claims adjusters, like tablets pre-programmed with appraisal software, may not always be up to date with current labor and materials costs. We hate to mention the pandemic again, but this was a massive issue for a few years immediately following COVID-19. The appraisal software used by adjusters did not accurately reflect the incredibly high prices for lumber, hardware, faucets, sinks, stoves, and so on.

This led to under-appraising of losses, which left many homeowners struggling to get their needed repairs, even though they had adequate insurance, which should have covered the claim.

Lastly, know that some insurance companies try very hard to limit the amount of money they pay out on claims every year. They motivate adjusters to keep claims checks low by offering cash bonuses or prizes to adjusters who keep costs down.

Our advice is this: work with adjusters, but do not simply accept their appraisals without question. Be ready to review their appraisals, call them back, and even argue your case.

Now, it’s time to think about the insurance policy and its limits, to be sure you aren’t making the common mistakes associated with under-insurance or inappropriate coverages.

Failing To Read A Policy And Ask, “What Is Missing?”

Some insureds never bother to read their policy. We know insurance documents can seem boring or complicated, but it is crucial to understand which perils are covered and which are excluded.

In some states, consumers can buy “all risk” or “open peril” policies, which cover any peril not specifically named in the contract. The language in the contract is important because it describes which claims will be covered.

For instance, most homeowner insurance policies will not cover flood damage. Floods will be specifically excluded from your HO policy. If you — or your mortgagee — believe a flood could impact your property, you will need another policy or an endorsement for flood damage. When getting quotes for insurance, ask yourself and the agent, “What is missing from this policy?”

Check On Low Limits For Expensive Belongings

Most policies have very low limits for specific expensive items. You may wish to add extra insurance riders for things like:

Technology, computers, servers, and such

This leads us to our next point on policy limits.

Failing To Review And Adjust Policy Limits Occasionally

Does your home insurance policy offer enough coverage? Real estate prices skyrocketed during and after the COVID-19 pandemic. Labor costs and building supply costs increase often, too. The insurance policy you bought 25 years ago may only offer $125,000 of coverage for a home that may cost $400,000 to rebuild, so consumers should consider updating their policy to reflect these changes.

Yes, your home insurance will cost more if you buy a higher coverage limit. But you will sleep better at night knowing you are fully protected, financially.

The reverse may be true as well; insurance companies may make underwriting errors.

Insurers May Undervalue Your Property

Currently, in 2025, homeowners in the Los Angeles area are suing major companies like USAA, AAA and State Farm. These policyholders allege that insurers knowingly and systematically underinsured homes in the area, by as much as 50% of the estimated costs to rebuild. They claim the appraisal software used by claims adjusters was incorrect, and that adjusters did not document important points of damage and loss.

Another common mistake associated with insurance claims is failure to buy the right type of policy when living arrangements change.

Failing To Purchase The Correct Type Of Insurance When Lifestyles Change

Homeowner’s insurance exists to protect your primary residence.

Short-term rentals (Airbnb, Vrbo, etc.)

Sometimes, living arrangements change, and consumers do not update their insurance policies. For example, if you made your home into a vacation rental and now stay in an apartment, your insurance company will probably avoid paying claims.

It is your duty, as the consumer, to notify the insurer and update your policy when living arrangements change, and this is a common mistake we see in homeowners’ insurance claims, and it is easily avoided with a phone call.

From here, we need to think about legal help for consumers who may be struggling with common homeowners’ insurance claims mistakes.

Failing To Seek Third-Party Appraisals Or Legal Counsel When Appropriate

Most states allow homeowners to hire a third-party claims adjuster, or “public adjuster,” when they disagree with the insurance company’s appraisal of a loss.

The four states that DO NOT allow consumers to hire an adjuster are:

Public adjusters can be expensive, but they might be worth the investment if the insurance company’s appraisal is tens of thousands of dollars off target.

Another option, when homeowners believe their insurance company is not fulfilling the contract, is to seek legal advice from an attorney. Some attorneys will need a retainer fee up front. Others might accept a case with very little cash investment from the homeowner.

We are not lawyers here at Einsurance.com, but we would suggest that a homeowner in this situation consult with a few attorneys before making their decision.

Our Final Thoughts On Common Homeowners’ Insurance Claims Mistakes & Tips To Avoid Them

Most of the common homeowner’s insurance claims mistakes can be avoided if you follow our tips above and keep educating yourself.

While insurance topics can be boring and complex, it is vital that consumers understand their rights and responsibilities.