Maybe you’ve filed your claim and received an offer, but you can smell the low-balling a mile away. Or your insurer denied your request altogether. Now you’re wondering how you can tackle the situation for a better result.
Always approach the claim process, from your initial filing to a dispute, with caution. The United States is a highly litigious country. We can file a lawsuit for almost anything. However, not everyone uses this privilege for good, which can lead to severe consequences.
If you’re contesting a claim based on greed, wanting to profit from the dispute, think again. Fraudulent claims will land you in trouble with the law. You’re better off taking the initial offer than pushing for unqualified benefits.
On the other hand, if your concerns are genuine because you suspect bad faith practices, or if the wording in your policy’s unclear and ambiguous, then file away. This article will discuss when you should dispute insurance claims and when seeking legal help is your best recourse.
I | Can you appeal a denied or lowballed homeowners claim?
Filing for a claim with an insurer can sometimes turn into a game of “Chicken” to see who flinches first. Here’s how the game works.
The first round starts when you lodge your claim application. In the second round, your insurer sends you a denial response, hoping you’ll drop the case and not pursue it any further. The same principle applies to lowball payouts.
Who’ll swerve first depends on if you accept the initial offer presented. Don’t be dissuaded by flinch tactics or those they use to delay the process. Keep on your course for a fair settlement.
Who you work with makes a difference.
If you’re working with a reputable company, they’ll give you a fair shake in proving your claim and reimbursing you based on your policy terms. For this reason, it’s important you factor in an insurance company’s ratings for results before signing with one.
When To Contest a Claim Settlement
As I stated before, some insurers make the claims process difficult for claimants. Rather than fulfilling their promise of standing by policyholders, they dispute legitimate claims and undervalue property losses and other damages.
They prioritize short-term profits by creating issues where there are none in bad faith.
Dispute a claim if:
- You suspect your insurance provider of any underhanded practices. They should provide you with an explanation for their denial of payment or initial settlement based on the evidence gathered. Always ask your insurer for clarification on their ruling.
- After receiving their reasons, you still believe you’re entitled to compensation or a higher settlement based on your home policy. Insurance-speak is confusing. You may require the help of a public adjuster or an attorney.
- There were retroactive changes to their policy conditions, which your insurance company didn’t notify you of. This omission is a major red flag as insurance companies, by law, must inform you immediately of policy changes.
- You’re on the right side of the law. If you know you aren’t guilty of non-disclosures, partial disclosures, or false disclosures of significant facts on your initial application, you’re in the clear. You may have slipped through the cracks once, don’t gamble on it happening twice. Insurance adjusters have ways of digging up secrets.
How soon you file your dispute is also relevant to the success of your claim. Time limits may apply.
II | Why Insurers Lowball or Deny Your Claims
An insurance company approving your claim is one thing. Sometimes it’s not even the biggest hurdle you’ll face. Receiving adequate compensation for your property is the sticky part. Payment disagreements are the most common insurance dispute between policyholders and insurers.
Insurance companies are businesses. Some minimize losses by undervaluing repairs and replacement costs, refusing coverage for certain damages, and not fully disclosing potential policy benefits. Ultimately, you’re left with a higher out-of-pocket cost than expected.
It helps to know your policy limits inside and out should you ever find yourself in a claims dispute.
Flat-out denials by an insurance company for compensation occur for the above reasons, plus:
- The damages not falling under your policy;
- The cost of the damage is less than your deductible;
- The damages sustained weren’t correctly reported.
Insurance companies have an obligation to shareholders as well. They implement checks and balances to weed out false insurance claims, but legitimate claims are sometimes affected.
III | Guidelines for Renegotiating Settlements and Denials
Approach your claim dispute in steps and within a reasonable period.
1. Understand your home insurance policy.
Sometimes claim payment disagreements arise from confusion or a misunderstanding of what is and isn’t covered.
Starting the claims process is never a good idea without a complete understanding of your policy. Understand what damages your policy covers, exclusions, endorsements, and dollar limits. Review the policy terms and conditions. You may have breached a policy condition leading to your denied claim.
When your insurance company debunks your cost estimate or denies your claim, they should give you a reason. This summary outlines why they denied or approved your request for a lower cost than expected. If this information isn’t provided, ask for it.
Ask your insurance agent or adjuster to point out the section in question if it cites an exclusion or specific language mentioned in your policy. Insurance companies often deny claims based on the misapplication of exclusions like:
- Pre-existing damages
- Lack of maintenance and neglect
- Cause of damage not being listed in the policy
Double-check your policies for asterisks. These may lead to fine print explanations of limitations not noted in the document’s main body.
It’s understandable if you missed something during the heat of the crisis. Before initiating a claims dispute, check for anything you may have overlooked or misunderstood in the details of your insurance coverage.
The results of this step determine what you do next.
2. Review and revise your original claim.
If you remain on solid ground for a renegotiation or dispute after the review in step one, carry on with step 2. Reexamine the details of the original claim for weaknesses and mistakes.
Perhaps you didn’t effectively present your case and needed to strengthen your argument. You may require additional evidence or documentation to prove you’re entitled to the claim settlement.
To dispute an unfair settlement, you require quality evidence that supports the reasons you believe you’re under-compensated. Evidence includes, but isn’t limited to:
- Picture and video of property damage
- Receipts for items to back up the valuation of your lost items and damaged personal property
Check for any missing details that would further bolster your compensation claim. For instance, if your insurance company’s offer falls well below your house’s repair or replacement cost, get a written estimate for the cost of repairs from an independent contractor.
A contractor would better estimate material and labor costs for a reasonable settlement.
Once you’ve improved your proof-of-loss documents, damage reports, and evidence, request that your insurance company reexamine your case.
3. Check your policy’s “Appraisal Clause.”
Standard homeowners insurance coverage comes with an appraisal clause. It outlines the procedure for approaching disagreements between insurers and homeowners on a claim payout’s dollar value.
The appraisal process under this clause requires the homeowner and the insurer to appoint a public insurance adjuster. The two appraisers will then choose a third. Together, the three will then carry out an independent appraisal of your losses, and when two of them agree on the same value, your insurer will settle your claim for that amount.
You and your insurance company will split the cost for mediation for the third adjuster, while you’ll pay in full for the one you hired.
Enact the appraisal clause and file a complaint with your state’s insurance commissioner. The commission oversees insurance regulations to protect fair pricing and practices for homeowners. Outside of the commissioner, you can also seek the advice of an insurance dispute lawyer.
4. Document your correspondents.
Keep track of every communication you have with your insurance provider. Log names, numbers, dates, and times of everyone you speak with about your claim. If you talk to an agent or claims adjuster over the phone, send a follow-up email clarifying what you heard and understood from the conversation.
These correspondents, via email, document your messages for later use. Some insurers like to delay the process by not responding to your calls. State insurance departments know of the practice and have set a time window for insurance companies to reply to your claim. 30 – 60 days is the typical timeframe.
lV | Challenging a Home Insurance Claim Denial With the Law
Consider hiring a legal professional if you hit a substantial roadblock with your insurer. Insurance law is a specialized field. Seeking guidance from a qualified and experienced attorney gives you leverage. Even more so than hiring a public insurance adjuster.
Lawsuits are time-consuming and last resort measures. All the better if you can resolve your differences in an amicable manner. Otherwise, explore all of your legal options and seek third-party opinions and recommendations from qualified professionals.
If you can’t afford an attorney, apply for help from a state-sponsored mediation program. Be mindful, however, that the insurance departments might not have adequate resources (attorneys, construction experts), and their influence has limitations. The department might be unable to help you resolve every disagreement between you and your insurance company.
But, if you lack an alternative, give them a call. Check your state’s department of insurance website for additional information.
Conclusion
Despite the tensions and frustrations involved in a claims appeal, be polite. Threatening an insurance company or adjuster would further strain relations.
Each insurance company has its claims settlement practices and requirements. Follow the proper steps for the best results and quickly hand in all requested materials. The process will not be a ” chicken ” game if you’re working with a company that values honesty and takes its obligations to clients at heart.
After your first rejection, take a step back and return to the drawing board. Determine if your insurer’s reason for declining your claim or proposing a lower settlement than expected is justified. Don’t just jump into a dispute because you don’t like the decision your receive. Establish solid grounds for an appeal. Provide all the documents and evidence you need for a favorable result.
