Did you know that according to the Insurance Information Institute, one out of every 15 homeowners who have home insurance file a claim each year? Many of us think that just because we have had our homeowner’s insurance coverage forever and paid our premiums that we are covered when a claim needs to be filed. The sad truth is that many of us are underinsured without knowing it. We might not realize that many of the things that can happen to our home are not covered by our insurance. Why is that you might ask? Well, we want affordable premiums, right?!!! Often that will provide you with inadequate coverage.
But there is another factor to consider, who do you think your insurance company is going to protect, you or them? They are in business, so if they can get you to accept a lower payout amount or simply deny your claim then why not try. The job of a company hired insurance adjuster is to give you a low ball payout amount and dispute charges for the restoration, mitigation, and reconstruction of your property. Many people give up too soon because they don’t know their rights and think that they are getting the whole story from their insurance adjuster. We want to help you understand your rights. After all, you have paid for a service for many years. You have paid for protection from a bad day, so you should be getting what you paid for.
So, let’s say you do file a property insurance claim and, to your surprise, your property insurance claim is denied or they offer to pay an amount far lower than you thought? What do you do next?
Here are the steps you can take to dispute the denial of coverage or a lower payout. In some cases, you merely need to provide additional documentation, but in other cases, you need to take more serious legal actions, follow these steps to build a strong case for your appeal.
- Do you know what’s covered under your policy? Sometimes denied coverage or a lower payout can result from a misunderstanding on the part of your insurance company. If you know your rights under your property insurance policy, you can bring any discrepancies to your insurance adjuster’s attention to appeal the denied claim or dispute the lower payout.
- Do you understand why your claim was denied or the payout was lower? You should receive a formal, written letter from your insurance company that states the exact reason your property insurance claim was denied. Don’t be afraid to contact your insurance company if you don’t understand why your claim was denied or if the reasons they provide are unclear or ambiguous reasons for the denial and get clarification. They should provide the same type of formal written response for what they will payout for your claim. They should identify what they will cover and what they will not cover. You can go back to them and discuss the reasons for it in more detail. In many cases, they will try to leverage loopholes in your policy to lower your payout amount. In some cases, you might be able to work with your water restoration company or fire mitigation company to go over the line items and adjust the claim as necessary. If the letter cites an exclusion or other specific language in your policy, ask your insurance company to point out the section in question. Document in writing everything your insurer and/or claims adjuster tells you. Keep a log of dates, whom you spoke to and what was said. If you get information by phone or in person, send a follow-up email confirming what you heard.
- Did you take pictures and extensively document your loss? Sometimes a claim may be denied or paid out for a lower amount due to insufficient evidence of your loss. Take pictures of the damages from multiple angles and from beginning to end. You will need to describe the time, date, and circumstances surrounding the damage in a written document. Keep handy any documentation that can help you prove the extent of your loss if your insurance company disputes the loss.
- Have you considered requesting an independent appraisal? If you disagree with your insurance company’s assessment of your property’s value and extent of its damages, request an independent appraisal to get a second opinion. Most policies have a specific provision that allows you to request an independent appraisal. Appraisal is a common process used in disagreements between customers and home insurers over property damage. Both sides pick an appraiser to represent them. Typically, you would hire a lawyer or a public insurance adjuster, Bach says. The two appraisers review the damage to your home and belongings and try to agree on how much you’re owed. A neutral party, called an umpire, breaks any deadlocks between the appraisers. The biggest downside to appraisal is that it determines only what was damaged and how much that damage amounts to, not whether your insurer actually has to pay that much. Appraisal won’t resolve disagreements over your coverage, the language in your policy or other issues holding up your claim.
- Can you prove that this claim wasn’t due to homeowner neglect? Many property insurance claims are denied because the damages are due to the homeowner’s negligence. In order to appeal the denied claim, you need to have sufficient evidence that you have done everything within your ability to prevent damage to your property. This can include records that show your property was up to code, receipts and documentation for repairs & improvements recently made, and even receipts for purchasing fire alarms and/or security systems.
- Did you know you can file an appeal? Many insurance companies will give you the opportunity to appeal the initial decision made by the adjuster. You can file an appeal directly with your insurance company and ask them to review your claim again. If you can’t get anywhere with the adjuster, you may be able to write a formal demand letter to someone higher up like a manager or someone else at the insurance company. Be sure to do so within the timeline of the appeal and include a written explanation of all of the evidence and documentation you have gathered to support your claim. Make sure you know the reasons why the claim was denied or payout was for a lower amount and make sure you address those issues in your appeal. Your water restoration or fire mitigation company might be able to help you adjust line items on their bill to help you with your appeal. Remember, the insurance company is a business that likes to make a profit. They are not necessarily looking out for you in this situation. You have the right to appeal their decision. Look to get insights and work together with your fire mitigation and water restoration company for help in navigating this process. They have a lot of experience working with insurance companies on these types of claims.
- Should you pursue mediation? Mediation involves hiring an impartial person, or mediator, to work directly with you and a representative from your insurance company to help you come to an agreement. You and your insurer split the cost for mediation unless your policy states that the insurance company must pay. The mediator can be court-appointed or a private professional whom both sides agree on. You can also go through a state-sponsored mediation program, which you typically can find through your state’s department of insurance website.
- If your claim was denied, did you filed a complaint? If appealing to your insurance company isn’t successful, you can also file a complaint with your state’s insurance board which will investigate your denied claim. The state’s department of insurance has staff on hand who can answer questions about the claims process and offer advice on pursuing your claim. Your state’s department of insurance also can inform you of your rights under various state insurance laws. The laws vary among states, but most states have laws that require insurance companies to deal with policyholders fairly and provide standards for how insurance companies must handle claims.
- Do you need to contact an attorney? If your property insurance claim was denied unfairly, an attorney can help determine your options for legal recourse and can represent you in further efforts to fight your denied claim. There are attorneys that specialize in these types of claims and know exactly what needs to be done to navigate through this process.