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What to Do If Your Homeowner’s Insurance Claim is Denied or Underpaid?

From Vargas Gonzalez Hevia Baldwin LLP:

What to Do If Your Homeowner’s Insurance Claim is Denied or Underpaid?

In our experience, it’s typically 30 to 40 days after a major weather event such as Hurricane Irma when letters begin filling homeowner’s mailboxes addressed from their insurance company informing them their claim has been denied or underpaid. From what we’ve learned from our clients and the thousands of claims we’ve fought, at this point you’re either – confused or lost as to why, completely shocked, or legitimately angry.

For these reasons, we’ve put together a guide for you to be informed and help you through the process of disputing a denied claim.

Review your policy

Understanding the coverage details of your policy is critical before disputing a denied claim. The most typical reasons insurance companies will deny a claim are as follows: the cause isn’t covered, the damages were long term or pre-date the inception of the Policy, or the Insured did not cooperate with their obligations under the Policy, which prejudiced the Insurance Company’s investigation of the claim.

Our advice is this, come up with a list of potential questions that might come up during the insurance company’s investigation and be ready to answer them. Review the policy (or at least your Declarations Page), and keep those questions and answers in mind in order to sufficiently challenge the reason for denial. If the policy was lost or destroyed because of the event or any other reason, call your insurance company, as they are obligated to give you a new copy.

If lost or overwhelmed when reviewing your policy, don’t delay in contacting us. Reviewing and helping you understand the details of your policy is standard practice during our free consultation.

Understanding the denial

A standard claims denial is received with a formal letter from your adjuster that should go into the specifics of the denial, along with a section of the policy that reinforces their reasoning. If you didn’t receive a letter detailing this, follow up with the adjuster. Your insurance company is obligated to explain in detail the reason for denial.

Once you have these documents, compare the reason with your policy. Look at the terms and ask yourself these questions – Did the adjuster fully understand what happened? Was the documentation you provided thorough enough to back up the damages in your claim? Was their a potential error when filing? If you’re unsure, call us immediately. With years of experience and knowledge of insurance companies tactics for denying claims, we believe no one should ever dispute an insurance company’s results without representation. Our claims specialist and appraiser will go to your home for a free damage assessment to determine the amount you are owed, not the insurance company.

Here are some common terms and helpful explanations that deal with denied claims:

Covered Perils

The sudden loss of a claim is often referred to in your policy as an Occurrence, and the immediate source of damage is called a Peril.

Perils are a specific risk or cause of loss covered by an insurance policy. Fire, wind, lightning, or theft are all considered perils. However, different policies will cover different perils. A named-peril policy covers the policyholder only for the risks named in the policy, while an all-risk policy covers all causes of loss except those specifically excluded.  Lightning, Wind, Fire, & Theft would all be considered perils. The three types of policies and the amount of named-perils they cover are:

BASIC (HO1 or DP1) – 11 named-perils

BROAD (HO2 or DP2) – 16 named-perils

SPECIAL (HO3 or DP3) – All perils, unless specifically excluded

In order for the claim to be covered the insurance company will send their adjuster, and they must be able to see there was an occurrence caused by a peril covered by the type of policy you have.

Claim is under deductible

The deductible of an insurance policy is the amount of money you as the homeowner agrees to pay in a claim.  If the amount of damage is LESS than your deductible than your insurance policy would not have coverage for that claim. The most common homeowner’s deductible is $1000.

However, there are different deductibles for separate types of claims like damage caused by wind or hail. These will be higher than the deductible for any other claim. Review and understand the differences in deductible amount of your policy for All Perils and Wind. Insurance companies charge high out of pocket deductibles for hurricane losses, which can be as high as 2%-5% of the policy coverage amount.

Exclusions

Certain things are limited or specifically excluded in homeowner’s policies. The most common exclusions are floods and water back-up/sewage overflow, especially in coastal states, like Florida, that are considered hurricane prone areas. Perils can be covered separately for additional cost, but people tend to be blind-sided after storms to find out their policy excludes hurricane/wind and hail.

Take Action

Don’t let ambiguous terms or vocabulary in the denial stop you from asking for clarification, and document those conversations. Call your insurance company for explanations and jot down who you spoke with and what they told you, detailing the date and times you spoke. At this point if you believe there’s enough valid reasons to challenge the denial, we suggest you contact us immediately in order to protect your claim.

What to Do If Your Homeowner’s Insurance Claim is Denied or Underpaid