While many homeowners hope that they will never have to file a claim, it is still crucial to understand how it works and when you will receive compensation for damages to your home and personal belongings.
First, it is important to know that there are different types of home insurance policies for compensation: an actual cash value policy vs. a replacement cost value policy.
Actual Cash Value vs. Replacement Cost Value 
An actual cash value policy provides compensation for damages to or loss of your insured belongings after accounting for depreciation. This means that, as the value of your belongings goes down, so does the amount of compensation you may receive. For example, say you purchased a television for $1,000 around five years ago. By the time it comes to file a claim, the cash value of your television has depreciated to $700. If you have an actual cash value policy, you will receive closer to $700 than $1,000 in compensation.
On the other hand, a replacement cost value policy does not account for depreciation. Instead, you will receive enough compensation to replace your belongings with ones of similar or identical value. So instead of providing $700 for a $1,000 television due to depreciation, a replacement cost value policy will help you replace the original value of the television. This type of policy is generally more expensive but may allow you to more easily replace your belongings.
When Does Home Insurance Pay Out?
When you file a home insurance claim, a claims adjuster from the insurer will investigate. The claims adjuster will consider the validity of the claim and help calculate how much compensation you may receive based on the damages and your policy.
Once a claim is approved, compensation may be paid. Most states have a time limit requirement for how soon an insurer must pay compensation. Generally, once a claim is approved, compensation must be paid within 30 days.
Keep in mind that not all claims are approved. Be sure to check your policy and ask your insurance agent any questions to avoid a possibly denied claim. Denied claims could be due to damages not covered by your policy, too many claims within a short period of time or fraudulent claims.
If you have any problems receiving compensation for an approved claim, however, be sure to contact your insurance agency.