When buying home insurance, you want the company you pay each month to cover any damage to your home and its contents. Unfortunately, insurance companies will sometimes deny your claims on technicalities or lowball your final payout. Thus, you may want to know how to go about disputing a home insurance claim.
For example, some insurers may offer cash in lieu of repairs to settle your claim. Getting cash instead of a settlement means the insurer gives you money to pay for some or all of the repairs or replacement rather than covering these for you.
If this is the case, you should always double-check how much cash in lieu they’re offering against repair estimates and other quotations from industry professionals. Make sure that they are providing adequate funding to meet your insurance policy’s terms.
Guide to Disputing a Home Insurance Claim
Here are some options for what to do when homeowners insurance denies your claim or when your payout is undervalued.
1. The DIY Dispute
The first thing you need to do is review your policy to make sure what you’re claiming is actually covered and verify how much coverage you’re entitled to. Some home policies might not cover damage from earthquakes or floods, so make sure to read the fine print on your policy. If your home is in a living trust, you’ll have to check how the revocable trust and homeowners insurance work together.
If you have a legitimate claim, review the paperwork you sent in. See if you might just need additional evidence to show damage or loss. Use a separate folder to keep the paperwork together with any printed photos, receipts, and repair estimates.
After you’ve reviewed everything, get in touch with your insurer to ask for clarification. Don’t be afraid to ask for the claims manager if the agent isn’t helpful.
Once you get to this point, make sure to document in writing everything your insurer tells you. Make notes during phone calls logging the date, time, and names of who you spoke with as well as what was said. Email those notes to the insurer or your representative to confirm what you heard. If you need help with some of the top home insurance companies or a list of companies to choose from.
These steps will help you prepare additional documents, such as repair estimates, that you might need to get your claim accepted or to increase your settlement amount.
With these documents in place, you can write to the claims adjuster for your insurer to dispute the denial or low settlement. One of the claims adjuster’s responsibilities is to negotiate payouts with customers, so don’t be afraid to raise a dispute.
You’ll need to briefly explain why you’re disputing the result, include the evidence for your dispute, and request that they review the claim. Make sure to request that they respond within a certain period.
Remember to keep a copy of this letter and the evidence you sent. If possible, send it via the certified mail option so you have a record of it being sent and delivered. You should also mail a copy to your adjusting agent’s supervisor.
If the dispute is not resolved at the end of the review, then you should ask for another at-home visit so you can present any additional evidence or testimony from repair professionals and investigators.
If they still won’t accept or adjust your claim, then file a complaint with the state department of insurance. If you are not satisfied with the result, move on to other options such as an appraisal.
2. Appraisal
An appraisal is a good route to take to settle disagreements over how much coverage you should receive for your property damage. In an appraisal, both sides will elect an appraiser to represent them. On your side, you’ll typically have to hire a lawyer or public insurance adjuster.
The two appraisers will review the damage and work together to agree on a payout amount. A neutral umpire, chosen by the appraisers, will be present to break any deadlocks and decide upon an amicable settlement if the appraisers can’t agree.
It’s worth noting here that appraisal isn’t legally binding and doesn’t force your insurer to payout. However, it is a lot faster and cheaper than pursuing a lawsuit and can result in higher payouts.
3. Mediation
A mediator is an impartial third party that will work with you and your insurance representative to form an agreement on a settlement amount.
As with appraisals, mediations are non-binding, which means that your insurer can ignore the results of the mediation. However, it’s fast and can get your dispute moving.
Some insurers will pay for the mediator, but check your policy to make sure. In most cases, you and your insurer will have to split the cost of hiring a mediator.
Mediators can be court-appointed. If you’re already going through your state department of insurance to handle the dispute, they could also be appointed by the department. Alternatively, you and your insurer can both agree on a private professional to mediate your dispute.
4. Lawsuits: Your Last Resort
If all of the previous options have failed, you may consider filing a lawsuit. Lawsuits are long and expensive, plus you’re not guaranteed to win at the end. So only turn to this option as a last resort. Lawyers will also often want to see that you’ve tried other avenues.
Before starting a lawsuit, you’ll want to seek a home insurance claim solicitor as they specialize in insurance law. Ideally, look for lawyers that offer free consultation sessions so you can find out whether your claim is worth pursuing before spending thousands of dollars out of pocket.
At this point, it’s important to weigh the cost of hiring a lawyer against your ideal outcome. The average attorney costs $225/hour, so more complex cases can easily cost thousands of dollars.
Your claim solicitor should be able to help you through the legal process. If you are successful, the lawsuit can be worth the time and money invested.
Disputing a Home Insurance Claim Denial or Settlement: In Summary
If your claim has been denied or you feel like you’ve been lowballed by your insurer, there are multiple ways to dispute the result. The first step is to negotiate directly with the insurer yourself. If that doesn’t work, consider appraisal or mediation to get the insurers to accept your claim or increase their payout.
Filing a lawsuit can be expensive and is a long drawn out process should be used as a last resort to solve a dispute. Only go this route after exhausting all of your other options.
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