When you first purchased your Greensboro home insurance policy, you were given the choice of determining the deductible amount you’d pay if and when you filed a claim. It should have been explained to you that the higher the deductible amount the lower your policy premiums would be, but if you filed a claim, that higher amount would be deducted from your claims payment. It’s a Catch-22. You want a higher deductible in hopes that you’ll never have to file a claim and be required to pay a deductible. Your insurance company is hoping the same thing!

In some cases, if your deductible is high enough, you may be eligible to file a claim and yet opt not to do so because the amount expected from the claim payment would actually be less than the deductible amount so you wouldn’t come out ahead. Plus, any claim you make on your home insurance coverage is a mark against your record in the eyes of your insurer. The good news is that when you do suffer a covered loss and your insurance company pays on the claim (after the required deductible is satisfied) an amount of money that came out of your pocket can be claimed as a write off on your income tax.

What the IRS Says

According to the IRS, you can claim a loss that results from, in their words, an event that is “sudden, unexpected or unusual.” Any casualty or theft loss that you suffer can be claimed as a tax deduction, minus the amount that you’re reimbursed by your insurance company. The money that you pay in the form of a deductible is also considered a loss and may be claimed as a deduction on your insurance form. It’s all spelled out here in the IRS’s Topic 515. You can claim losses from just about anything, as long as it falls into the IRS definition of sudden, unexpected or unusual. This includes:

    • Fire
    • Flood
    • Thefts/robberies
    • Storms
    • Car accidents
    • Vandalism, volcanic eruptions and more

    What you cannot claim are losses covered by insurance, normal wear and tear or deterioration. If, for example, your water pipe rusts through and floods your basement, you cannot deduct the amount it costs to repair the pipe. If a pipe breaks because of a hard freeze and floods your basement, however, this could be claimed. Consult your Greensboro home insurance agent for clarification.