How to Dispute Home Insurance Claim Denials and Settlements
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Dealing with damage or loss of your property can be stressful enough, but if your homeowners insurance claim is denied after filing with your insurance carrier, it can add another layer of stress. A claim may be denied due to negligence, lack of coverage, missing a filing deadline or not having enough documentation. Fortunately, consumers have options for home insurance claims and settlement denials. If you find yourself in this situation, knowing that you can dispute an insurance claim denial may help you get the matter resolved. Bankrate outlines five steps you could follow below on how to dispute an insurance claim.
1. Review your claim and coverage
Ideally, it is important to review your coverage before a claim ever occurs to help minimize the risk of a gap in insurance coverage. Knowing what type of damage or event is covered by your policy can help you financially prepare for what may need to be covered out of pocket. When reviewing your policy, look at what events and property are included, check for any exclusions, review your deductible and review the claim submission process.
In a claim situation, checking the information you submitted to the insurer about the claim is important. Ask yourself if you provided adequate supporting evidence and documentation. If you still feel the insurer misjudged your claim, you will need to properly understand the details you submitted to prepare for a follow-up conversation.
Tips when reviewing your coverage
As you are reviewing your policy, you may find it helpful to include the following steps during your initial review process.
- Write out all the questions you have as you are reading through the policy.
- Gather as much documentation as possible, including photos, eyewitness statements, videos and any other information you feel is vital.
2. File an appeal
Once you are confident you understand the way the policy is written, you can call the insurance company and ask for your claim to be reviewed again or request a new examination based on new information. It is possible a mistake was made by an adjuster the first time around. If you have any questions about your policy’s coverage, your claims adjuster can help answer these questions, too.
To file an appeal, having the right documentation helps. This can include dates and details on the incident, including photos, videos and witness statements, if applicable.
Tips when filing an appeal
If you plan to file an appeal, these tips can help:
- Ask for another home visit
- Collect as much documentation and proof as possible
- Explain the reasoning for your appeal in a clearly-worded letter
3. Get another professional opinion
If you have requested a re-examination of your claim and the request was denied or resulted in the same denial, then it may be time for another professional opinion. As a consumer, you have the right to hire an independent appraiser or a public insurance adjuster. A public insurance adjuster is not affiliated with any particular carrier and may be hired on your behalf to help you settle a claim.
When hiring a professional, it’s a good idea to check references and recommendations. This can help ensure the adjuster is licensed in the state where you are filing the claim. You can also call your state insurance department to confirm the adjuster’s record. While an independent appraiser or public adjuster may provide useful assistance, hiring one does come at an additional cost. Independent adjusters may charge up to 15 percent of the settlement claim, and there are no guarantees the claim will be settled.
Hiring an independent party can either show support for the insurance carrier’s original denial or provide support for your claim. If the recommendation made by the public insurance adjuster supports your claim, you could consider contacting your insurance provider and requesting to speak to the claims manager. At that point, you might request the claim be reviewed once again.
Tips when contacting another insurance professional
If you do bring in an independent insurance adjuster, keep these tips in mind as you are hiring:
- Ask for recommendations of public insurance adjusters from friends or family members who have gone through the process of having a claim denied and seeking third-party help.
- Ask for references from the public adjuster and consider checking the Better Business Bureau and your state’s Department of Insurance to review complaint history and how they may have handled prior insurance claim disputes.
- Avoid using a public insurance adjuster who goes door-to-door to solicit business after a catastrophe.
4. File a complaint with your state’s insurance department
If you have hired a third party and the claim is still denied or offered too low of a settlement, you could register a complaint with the state insurance department. This option may be best if you feel your insurer denied your claim unfairly and would like your state insurance department to investigate the situation to ensure your insurance contract and state insurance laws were properly abided by. When you call the insurance office, you may also be made aware of additional resources you didn’t realize were an option. The National Association of Insurance Commissioners (NAIC) has a list of each state’s Department of Insurance, which should have information on how to file a complaint in your state.
Tips when filing a complaint
When filing a complaint, consider the following:
- Ask the state insurance department if there are any available resources to contact the insurance carrier directly and speak about your claim.
- The state insurance department usually puts a time limit for carriers to respond to a claim. You can inquire if the insurance carrier responded in a timely manner.
- Check the NAIC consumer resources to see if any other complaints have been filed against the insurer.
5. Hire an attorney
Another option is hiring an attorney, although this route will have to be paid for out of pocket. Attorneys typically charge a consultation fee and an hourly rate for legal advice, which means the expenses can add up quickly. You will have to balance the cost of an attorney with the end result of having a claim approved — or potentially denied again — and determine if the process is worth it for you.
Terms to know when disputing a home insurance claim denial or settlement
There are a few terms used in claims filing and processing that may be helpful to know up front.
| Appraisal | An appraisal is a detailed assessment of either the property or property damage. An appraisal is written by an adjuster to estimate the amount of damage from a loss. The initial appraisal is usually provided at no charge from the insurance carrier. |
| Mediation | Mediation is a meeting between a representative for the insurance carrier and the policyholder. A mediator will facilitate the meeting and both parties will present information regarding the claim. The goal is to find a solution for both parties. |
| Adjuster | This is a professional hired to evaluate property damage. The adjuster will determine how much damage has occurred to the property. The adjuster will also recommend the amount to be paid out for the damages. |
Reasons your home insurance claim may be denied
Although a homeowners insurance policy is designed to provide financial protection in case of damage from a covered event, there are certain circumstances where a claim may be denied, including:
- Lack of coverage – Homeowners policies do not cover every type of event or cause of damage. Policies have exclusions, meaning damage caused to your home by certain perils is not covered. For example, flood coverage is excluded from standard homeowners insurance coverage.
- Missed filing deadline – There are time limits on when you are able to file a claim. Generally, this time limit could be up to a year from when the incident occurred, but it can vary by insurer and state. This is why it is important to file a claim as soon as the damage takes place and it is safe to do so, to avoid missing critical deadlines.
- Not enough documentation – If you failed to submit sufficient documentation, such as photos, videos or witness statements, it could result in a denial of your claim. Insurance adjusters rely on as much detail as possible for making a decision, so the more supporting evidence, the more informed a decision the adjuster can be.
- Negligence – You are responsible to maintain your home, which includes regular maintenance and repairs. Failure to maintain your home and perform repairs as needed can cause your appeal to be denied if it is found to have contributed to the cause of loss.
Sometimes, your insurer may not deny your claim outright. Instead, a settlement could come in lower than expected. If this is the case, the same process of reviewing all related documentation, asking for another review and hiring an independent third-party investigation could be used to dispute a home insurance claim settlement offer. You could also seek the advice of an attorney before accepting a settlement amount.
