Understanding Service Contracts to Avoid a Homeowners Insurance Claim
Tips From a Claims Adjuster
Property damage claims can be a time consuming and detailed experience. Accredited claims adjusters have seen damage from flooded kitchens and bathrooms, due to plumbing issues, to electrical damage caused by a miscommunication with a repair company. While your homeowners insurance is there to protect you from the unexpected, many claims could have been completely avoided by understanding and reviewing service company contracts before signing on the dotted line.
There are some easy ways to avoid headaches, damage, and ultimately claims that can affect your premiums. You can decode those service agreements for plumbers, HVAC technicians, roofers, and general contractors, so you can make smarter decisions that protect your home and your wallet.
Read the Entire Contract (Yes, the Whole Thing)
Most of us skim through contracts and assume it’s all boilerplate language. But skipping over the fine print is a huge mistake. Service contracts are legally binding documents, and you’re agreeing to everything in them, whether you read it or not.
Take the time to go through the full document. If anything is unclear, ask the company to explain it in plain terms. If they can’t, or worse won’t, that’s a red flag and an indication you should choose another company.
Key sections to review:
•Scope of work
•Payment terms
•Timelines
•Cancellation policy
•Liability and warranties
•What their contractors will and won’t do (i.e. they will or won’t touch electrical or water lines)
Check for Insurance and Bonding Requirements
Before hiring any service provider, verify that they are insured, licensed and bonded. A reputable company should have general liability insurance and workers’ compensation. Why does this matter? If a worker gets injured on your property and their company doesn’t carry the right insurance, you could be held liable.
Ask for a certificate of insurance (COI) and confirm that it is current. Also, check that they are bonded. A surety bond protects you if the contractor fails to complete the work or meet the terms of the agreement.
Ask for a copy of their license. Are they licensed to be doing business in your state?
Clarify the Scope of Work
Ambiguity in service contracts is a common culprit behind home damage that leads to insurance claims. If your HVAC contractor says they’ll “inspect and clean the system,” what exactly does that include? Are they cleaning vents? Replacing filters? Checking for mold or leaks?
Get everything in writing. If something goes wrong down the line and the service provider says, “That wasn’t part of our job,” a clearly defined scope of work can protect you from unnecessary disputes and potential damage that leads to an insurance claim.
Understand Exclusions and Limitations
Most contracts include exclusions, which are situations or conditions that are not covered by the service. For example, a roofing contract might exclude damage caused by existing mold, or an appliance repair contract might not cover parts older than five years.
These exclusions can affect your ability to seek reimbursement or additional work if something goes wrong. Worse, they can leave you footing the bill for damage that your insurance may deny due to negligence or improper maintenance.
Pay Attention to Warranty Terms
Not all warranties are created equal. Some cover only parts, others labor, and some both but only for a limited time. Knowing exactly what is and isn’t covered can save you from double-paying when something breaks shortly after a service call.
Pro tip: Keep a folder (physical or digital) of all your home service warranties and receipts. This makes it easier to prove proper maintenance or repairs if you ever need to file a claim.
Don't Sign Off Too Soon
Many service contracts will include a final sign-off or completion acknowledgment.
Do not sign this until:
•The work is fully completed
•You’ve done a walkthrough or inspection
•You’ve verified that everything works as promised
Signing off prematurely can limit your ability to request fixes or claim that something wasn’t done correctly.
Document Everything
Take photos before and after any service is performed. Save all email or text correspondence, especially if you’re requesting a change to the contract or timeline.
These records are invaluable if there’s ever a dispute or in the case damage occurs and you need to show your insurer that you acted responsibly.
Ask About Emergency Procedures
If you’re hiring a company for systems that could cause serious damage when they fail, such as plumbing, electrical, or HVAC, ask them what to do if a problem arises after hours. A simple water leak can turn into a flooded kitchen if you don’t have an emergency contact or know how to shut things off.
Having a clear plan in place could be the difference between a minor inconvenience and a major insurance claim.
Prevention is Always Better than a Payout
Accredited claims adjusters are available to help when disaster strikes but nearly all of them would much rather see homeowners avoid preventable damage in the first place. By taking the time to understand service company contracts, you not only protect your home but also preserve your insurance record and premiums.
It may feel tedious now, but a little extra diligence can save you from serious stress (and expense) later. After all, your home is your biggest investment.
About ESC
Educational Services & Consulting are industry leaders in offering the 6-20 Accredited Claims Adjuster (ACA) designation to prepare professionals to work in both independent and staff adjuster roles. Those enrolled in the 6-20 ACA course can bypass the Florida State exam by passing ESC’s final exam. With the 6-20 ACA designation, adjusters can apply for an all-lines adjuster license in Florida, qualifying them to handle home, auto, and property insurance claims in the wake of multiple storms.
ESC is dedicated to training the next generation of adjusters who will play a pivotal role in the recovery process for anyone involved in a car accident or other property loss. As the demand for skilled adjusters grows, their contribution to community resilience and recovery becomes even more critical.
For more information on how to earn your 6-20 ACA designation, review our FAQ page on our website or call our Clermont, Florida office at 1-800-309-2549.