You have homeowners insurance to cover damage to your home and its contents. So, when an unforeseen event happens and you have to file an insurance claim, you expect everything to be covered—especially since filing a home insurance claim often involves multiple steps.
Unfortunately, full payment from the insurance company doesn’t always come through; the insurer can deny your claim for many different reasons. Even if your claim is approved, the settlement amount may be less than you expected. Both of these situations can add to your stress and frustration levels.
If you’re having trouble settling your claim, what can you do? Learn what steps you can take to dispute the decision and try for a different outcome.
Review Your Home Insurance Policy
If your home insurance company denied your claim or approved it for an amount lower than you expected, review your policy carefully. During this review, verify that your existing policy covers your claim. If it does, note how much money you’re entitled to under your coverage limits.
Standard home insurance policies don’t cover everything. For example, damage due to floods and earthquakes is typically not covered. If you are at risk for these perils, talk to your insurance company about purchasing an additional policy to protect you.
If your claim was denied for reasons made clear in your policy, the cost for repairs or replacement is probably your responsibility. However, if your insurer made a mistake in either denying your claim or approving it for a lowball amount, you have a few different avenues for action.
Ask for Clarification
After you’ve reviewed your policy, ask your agent or insurance representative for clarification. It’s likely you’ll want to level up and speak to the claims manager directly. Why, specifically, was your claim denied, or how did the insurer arrive at the dollar amount it approved?
If the agent or representative uses language that confuses you, ask for further clarification until you understand the reasoning behind the decision that was made. If you don’t, it may be time to take another approach. If your agent can’t address your concerns, ask if the insurance company can send out a different adjuster for a second opinion.
Clear communication is essential during this stage. You want to have a complete understanding of the decision before accepting it or deciding to pursue your dispute further.
Appeal the Decision
If your insurer denies your claim, you can appeal that decision. The insurer may have a standard appeal form you can fill out, and you’ll usually need to submit it within a year or two of the date of loss. Check with your insurer about the appeal window if you’re unsure how long you have and ask about next steps.
Once you know how the process works, gather all the evidence and documentation you can to make your case. Some of the information you’ll want to gather includes:
- The incident details (dates, damage, what you did beforehand to prevent the damage).
- Witness statements about the incident.
- Proof that you did what you could to prevent the incident from happening.
Submit your appeal form and the corresponding paperwork that supports your case. Your appeal should trigger a review of your denial.
A well-organized appeal can increase the chances that the insurer will do more than just a basic review of your appeal.
In the weeks and months that follow, check in with your insurer to see how your appeal is advancing through the process.
Contact Your State Department of Insurance
During the appeals process, or if you haven’t made any headway with your insurance company, reach out to your state’s department of insurance for advice, free resources, and next steps. Insurance departments typically have a number you can call for help and explanations about the basics of homeowners insurance in their state. Plus, some states might investigate your claim and/or offer free mediation services to assist you in settling without involving a lawyer.
Your state’s insurance department is led by an insurance commissioner who is a public official. In addition to providing information about policies and insurers, the commissioner’s office can investigate problems and ensure that claim decisions follow the law.
Consult a Lawyer
To assist in negotiations, especially for high-value claims, consider consulting an attorney. If you go this route, make sure you select one who specializes in home insurance claims. This way, you have the best legal representation possible. Many firms offer free consultations to review your claim and decide if you have a case worth pursuing.
If you’re considering hiring an attorney, do so before you’ve reached any binding settlement offer, such as one made via the appraisal clause in your insurance policy.
Get an Independent Appraisal
If your claim wasn’t denied, but you and your insurer disagree on the amount of the damages or repair costs, you can get an independent appraisal from an appraiser or public insurance adjuster.
Your insurance policy should clearly state the process for proceeding, under the “Appraisal” section in the policy. Often, you’ll need to submit a request in writing. Then, you and your insurance company each select a qualified appraiser. Depending on your policy, the appraisers may work to come to an accord on their own. If they can’t or if your policy specifies that they do so initially, they’ll select an impartial umpire, or mediator, who will help to determine your claim’s valuation. If at least two of the three parties agree, it sets the amount of your loss, which is binding.
You are responsible for the cost of this appraisal and split the cost of the umpire with the insurance company. It’s worth it to research the price before you begin, as public-adjuster service fees can cost as much as 20% of your settlement’s total value.
No matter which state you live in, include supporting documents to verify your complaint, so make sure you keep good records throughout the process.
File a Complaint
If you feel your insurance company has mishandled your claim, consider filing a complaint with your state insurance department. Since each state has its own process for filing a complaint, begin by researching your location’s requirements.
The Bottom Line
When you’re disputing a home insurance claim denial or low settlement offer, it’s essential to understand the terms of your coverage and the reasons why the insurer denied your claim. If you believe the company should have approved it, you should utilize your state insurance commissioner’s free resources, and may want to work with a third-party appraiser, and/or a lawyer to reach a satisfactory agreement.