Insurance Consumers

Homeowners Insurance

Filing Claims

Index

Hopefully you will never suffer a serious loss, but if you do, remember that the insurance company's duty is to verify your claim is legitimate, fair and falls within the perimeters of your policy.
While providing customer service, the insurance company representatives also have a responsibility to their employers to perform their jobs properly. Prepare yourself before making a claim, and be perseverent in addressing any concerns you may have about the claim, approval or denial, or information used to determine your benefits.

Preparing BEFORE Submitting a DWELLING OR PROPERTY LOSS Claim

If you have suffered a dwelling or property loss, take the following steps:

First, notify the insurance company of your loss. Do not go into specifics at this time. Wait until you have had time to review what occurred and to re-read your policy and these materials.

Safeguard your property ("Mitigate the loss"). You should take steps to protect your property from further damage. Otherwise, any additional damage may not be paid for by the insurance company (they would still have to pay for the original damage). For example, if a wind storm blew out a glass window, cover the windows with heavy plastic, tarp or boards to prevent the inside of the home from further water or wind damage. Likewise, after a fire, relocate undamaged clothes or furniture to prevent or reduce damage.

Document your loss carefully. Use photographs, contractor bids, expert reports and appraisals.

Never discard damaged or destroyed property unless you have received written authorization to do so from the company.

Keep careful records, including notes of conversations with insurance representatives and letters to and from the insurance company. Never send intemperate letters or make offensive or insulting statements to insurance company representatives.

 

Preparing BEFORE Submitting a Homeowners LIABILITY Claim

When you believe a claim or lawsuit may be filed against you, you should do the following:

Obtain a list of any and all witnesses to what happened. Write down and save their names, addresses, and telephone numbers.

Save any possible evidence.

Photograph anything of significance.

Promptly send the insurance company a WRITTEN "Notice of Liability" letter, which states that you believe a claim or lawsuit may be filed against you. Include the date, time and location of the accident and the name, address and telephone number of the person who may file the lawsuit. Keep a copy of this letter for your records.

Keep careful records, including notes of conversations or correspondence with insurance representatives or others.

Evaluating your Claim

Personal Property Damage Claim

First, prepare a detailed list of all items of personal property that were lost, damaged or destroyed.

Second, ascertain the actual cost (including taxes) of replacing each of these items.

Third, determine the conditions of your personal property damage coverage under your policy. Are there applicable deductibles or limits? Do you have to actually replace specific items before you will be given the replacement value of these items? Were specific endorsements or appraisals necessary in order to fully cover all of your lost property? Did you have those coverages in place?
Put all of this information together and do the necessary additions and subtractions to calculate your covered personal property losses.

If the amount of your coverage on these or any coverages was insufficient, whose fault was it? If it is the insurance company's fault, add up what it would have owed had the coverage amount been proper and include this in your demand.

Dwelling Protection Coverage Claim

A dwelling or other real property loss claim is really determined by two steps.

Step one is what are the things that need to be done. This is called "Scope of loss."

Step two is how much will it cost to do each of these things. This is called a "bid."

It is important for you to use your own trusted experts, contractors, engineers, architects, etc. An insurance company's experts may find it necessary to make assumptions, which may or may not be accurate. In addition, there is a big difference between a contractors "estimate" versus a "bid" to actually do the work. It is easy to give a low estimate if you are then required to do the work.

Always make certain that a bid is for like kind and quality materials and workmanship that is comparable to what you had. Custom baseboards, granite counters, mortered showers, brass fixtures, antique lighting units, solid doors, wool carpeting, etc, are all much more expensive than substitute counterparts. This can make a difference of tens of thousands of dollars and more. It can also make a huge difference in the finished value of your home.

Be very careful with putting together these bids.

For a list of reconstruction experts in your area who will provide you with free bids, click any of the following: general contractors, architects, engineers.

ALE Claim

Assess the total cost to you of obtaining substitute (like kind and quality) rental accommodations for the time necessary for you to stay out of your home. Check your ALE coverage, noting any applicable limits on that benefits.

YOUR DUTIES When Submitting a Claim

Dwelling and Property Damage Claims

If you are submitting a Dwelling Protection or Property Damage claim, send the insurance company a "Notice of Claim" letter. Include your name, policy number, the date, time and location of the accident, a general statement of what happened, and a copy of any estimates, bids, or scope of loss that have been prepared by you. If you are requesting ALE expenses, you can put this in the letter too.

Liability Claims

If a lawsuit has been filed against you and you are submitting a liability claim, send the insurance company a "Tender of Defense" letter. This letter should include your name, policy number, the date, time and location of the accident, a general statement of what happened, the names, addresses and telephone numbers of any victims and witnesses, and a copy of the suit and/or any documents that have been sent to you regarding the suit.

The Tender of Defense letter should also ask the insurance company to:

• Defend and handle the situation and
  
• Send you the name of the attorney if one has been selected to represent you.
  
• Keep copy of this letter for your records.

Other duties you have when submitting a claim include:

The Duty to Cooperate, which means that you should tell the insurance company every thing they need to know to process and investigate your claim. You need to make yourself available to speak with insurance company representatives. You also need to make any damaged property available for inspection by the company or their contractors or others.

The Duty to Preserve evidence of the loss, which means that you should not remove or alter any evidence of the damage without the company's ok. If something needs to be repaired, receive written permission from the insurance company to repair the damage, and store the company's response with your insurance information.

The Duty to File a "sworn proof of loss," and

The Duty to Prepare a personal property inventory of your loss, either on your own paper or on a form provided by the insurance company.

Everything you submit to the insurance company must be precise and true. Never overestimate, misstate or exaggerate any aspect of a claim. If you do make a mistake, correct it in writing as soon as possible and keep a copy of the letter in your records.

YOUR RIGHTS When Making a Claim

You have the same rights and responsibilities as a policyholder with respect to a Homeowners policy as with regard to most other types of policies. To review those rights and responsibilities, see the Insurance Consumers Bill of Rights.

In virtually all states, insurance policies contain an "implied covenant (provision) of good faith and fair dealing". This means that both sides must treat each other fairly and reasonably in all aspects of the handling of covered claims. Failing to do this can result in different consequences, depending on your state. The point that is important to remember is that this duty exists and is a serious one.
Insurance contracts are purchased by consumers to provide peace of mind and financial security. The principles and obligations that attach are consistent with this concept.

What Happens AFTER You File a Homeowners/Renters Claim

The insurance company must respond promptly to your claim.

For dwelling and personal property loss claims, the insurance company prepares a scope of loss, which aids it in determining what property is damaged, how the property was damaged, and how much it may cost to repair or replace the damaged property.

TIP: You should have an independent scope of loss prepared. Hire a contractor to observe the damaged real property and provide a scope of work and a bid of how much it will cost to repair. If personal property has been damaged, hire or consult with an expert about its current value and/or the cost of having it replaced.

If an agreement between you and the insurance company is reached at this point, the insurance company will either pay your claim or pay someone to repair or replace the damaged property.

For liability claims, the insurance company will determine whether the suit against you is covered by the policy. The insurance company may agree to represent you, but only with a "Reservation of Rights." This means that the insurance company is not necessarily agreeing that your lawsuit is covered under the policy. Therefore they may not pay a judgment or settlement. In addition, you may later be asked to reimburse the insurance company for any legal fees incurred in your defense.

If this happens there may be a "Conflict of Interest" between you and the carrier. This means that the attorney chosen by the company to represent your and the insurer's interests may be representing competing interests. In such a situation you may want to ask the insurance company to appoint a separate independent attorney who represents ONLY your interests.

Getting Paid Negotiating. Alternative Dispute Resolution. Time limitation provisions. State Departments of Insurance. Negotiating is really about five things:

Knowing the facts cold

 

Understanding your rights

 

Being a good listener

 

Advocating your position effectively

 

Being firm but reasonable

If you have prepared and documented your claim carefully, and you know the ins and outs of your policy, you are way ahead of the game. Understand not only your position, but the company's position as well. What are they saying and why are they saying it? Are they wrong? If so, why? Exactly. What would be the most effective way of convincing them to change their position? And if not, how should you go about reevaluating your position?. Many negotiators believe you should start out with a high demand. Otherwise, you have nothing to bargain down from and you run the risk of creating an early impasse or of winding up with much less than you are entitled to, simply because bargaining is a part of the process. Others say that an unreasonably high demand creates an antagonistic atmosphere and that it is an artificial and counterproductive tactic. Either way, there is no substitute for painstaking preparation and analysis. That way, when you make a demand, you can back it up with the necessary facts and arguments.

If reasonable attempts to negotiate a resolution of the claim fail, most policies either require appraisal, mediation, or arbitration. Many ADR provisions, as written by the insurance company, are expensive, time consuming to administer, and limited in what they can accomplish.

While you are considering the resolution approach you wish to take, there is another thing you had better look up in the policy: contractual limitations period. Some policies contain provisions restricting your ability to recover benefits by requiring that any "claim" be filed within a certain time (typically one year) of the date of the loss (state law usually gives you one or two years from the date the claim is denied. But, if your insurance contract says something different and you signed it, then the insurance contract may control) If your policy contains such a provision, watch out. It could mean that unless you do file a claim against the company within the designated period, you lose all right to do so. Things you should not do include:

1. DO NOT cash any check from the insurance company unless it contains a clear statement that it is only a partial payment and that no release of further obligations is intended .
2. DO NOT under-settle your claim just to get "some money". Do not be afraid to say the insurance company is wrong.

Examinations Under Oath (EUO) In some cases insurers respond to claims disagreements by demanding to take an EUO. This is a proceeding in which you must go to the office of the insurance company's lawyer and submit to detailed questioning about your claim. A court reporter is often present and/or the exam is tape recorded. You are placed under oath and grilled - sometimes for hours. Never attend an EUO without preparing thoroughly beforehand.

• Read you policy.
• Read your claims documentation.
• Read your notes.
• Read all correspondence.
• Anticipate every question you can think of being asked.
• If you do not fully understand a question, ask to have it repeated.
• If you do not know an answer, do not guess.
• Maintain a pleasant demeanor. Even if it hurts.
• If a substantial claim is at stake, bring an insurance expert with you.
• Respond to questions with brief answers. Do not volunteer information not specifically asked for.

If the lawyer questioning you is harsh or abusive, or if you are asked questions that seem to be and invasion of your privacy, politely suspend the proceedings until you can obtain legal advice on these matters. Don't make a passionate speech on the record. Just say, "I'm sorry," and leave.

Carefully search your policy for any time limitation provisions that may be imposed. Many insurance contracts contain provisions stating how long you have to file a claim or suit against the company. This is known as a contractual statute of limitations. If you do not file a lawsuit within the time period set forth, you may lose all of your rights to recover anything on your claim. For example, the policy may say that you have only X months or years from the date the claim arose, or from the date the claim was filed, or from the date the claim was denied. These would obviously create three different expiration dates. Read carefully. Whether or not a time period is mentioned in the policy, you will need to research your state's laws concerning applicable statutory statutes of limitations. Every state can differ in its statutes of limitations. Furthermore, such limitations differ depending on the legal basis for the claim. For instance a breach of contract statute of limitations may be four years whereas a bad faith suit statute may be two years, or voce versa. It all depends on your state and theory of recovery. 

 

If All Else Fails

In many states, the previously mentioned Duty of Good Faith and Fair dealing - implied in every insurance contract - allows policyholders to recover losses and damage covered by an insurers unreasonable conduct. These recoverable losses can include (depending on your state) all damages caused by unreasonable delay, underpayment or claims denial.

In many states the policyholder can also seek general and exemplary damages.