Many homeowners have questions about what's involved with the homeowners insurance claims process: How do home insurance claims work? How are homeowners insurance claims paid? And how long do homeowners insurance claims stay on your record? Producer Ben Galbreath addressed home insurance claim topics in an interview with Insurance.com.

Can you keep your home insurance claims money?

Technically, if you are paid for a claim by your insurance company, you aren't required to spend the money on repairs, remediation or replacement if you own your home outright. But if you pay a mortgage, your lender may require you to use the money to fix or rebuild your home.

Even if you own your home outright or your lender doesn't obligate you to use the claim payout for repairs, think twice before choosing to pocket the money.

"Say you choose to take the claims money, not repair the damage and instead buy a car, for example. If so, your insurance company has every right to amend your policy, exclude damaged property they've already paid out for or even cancel or non-renew the policy altogether. If you do elect to keep the funds and not make repairs, the replacement cost clause becomes null and void," cautioned Ben. "When you sign the application for a standard homeowners insurance policy, you are agreeing to transfer the risk of financial loss to repair or replace any damage to your home and put it back to its original status before the loss or better."

How long does a home insurance claim stay on your record?

Typically, an insurance claim related to a recorded loss remains on your record for three to seven years. If you file one or more claims within this period, your premiums may increase or you could be excluded from coverage.

"Insurance companies tend to look at the frequency and severity of claims. If there is a high frequency - meaning high number of claims - they may increase your deductible, force you to purchase specific coverage elsewhere, change the way losses are evaluated from replacement cost to actual cash value, or cancel your policy entirely," Ben said.

Read the full article here.

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