There are complaints and horrible stories all over the web about insurance claims gone horribly wrong. One person knows someone who thought they were covered in the event of the water heater exploding, only to find out that the insurance company will pay them nothing due to code violations. Another person can’t believe that their claim for their foundation is being denied on what seems to be a sneaky technicality.
Most of us have some form of insurance: auto [1], home [2], health [3], life [4], long term care [5] etc. We pay into these policies monthly, semi-annually, or annually, for years. So when we need to make a claim, we expect the company to pay up. When they don’t, it can be heart-breaking or just make us quite angry. After all, how much money have you paid into that policy over your life so far only to be turned away at the door?
There are ways to both prevent, and deal with situations where you feel that your insurance company is not working in your favor.
Prevent Insurance Claim Problems
The most obvious way to prevent insurance claim problems is to thoroughly read through your policy. It may be tedious, but it will put you in a better position to understand what is covered, what is not, and how to make a claim. Aside from reading the policy, here are several more tips:
- Request, and read through your insurance company’s Consumer Bill of Rights, which will explain your rights and responsibilities.
- Maintain records of improvements made to your property (including quotes, receipts, and new photos).
- Keep a file of correspondence between you and your insurance company. I have a specific folder in our filing cabinet for this purpose, and on more than one occasion I have had to refer to it.
- Take photographs of everything having to do with your insurance policy. Not only is this proof of what you own, but it is also proof of the condition of what you own prior to the damage/theft/etc. that may happen. This is particularly important for policies where you do not fully own the property (such as a car you are leasing, or a home where you are paying a mortgage), as these types of policies may require you to make reasonable and necessary repairs to protect the property from further damage.
Deal With Insurance Claim Problems
First of all, if you have gotten to the point where you are having insurance claim issues, I am really sorry for your frustration. Here are a few ways that could help in your struggle to either get your claim approved, or to understand more clearly why your claim is rightfully being denied:
- I was a regulator for the state of Texas, and one of the best ways I found to needle through the laws and regulations was to ask for the specific citation/location of the rule language in question. It is no different with your insurance company; if they are claiming they will not pay you for x, y, and z, ask them for the specific location within your policy where they are basing this decision off of. Could there be a misinterpretation of the policy language? It’s happened before.
- Take photos of the damage [6].
- Be sure to not make any permanent repairs until an adjuster has inspected the damage or given you instructions [7].
- Attempt to negotiate with your company for a better settlement [8]. Ask your adjuster for an itemized explanation of the claim settlement offer so that you are armed with the maximum amount of information possible (for a homeowner’s policy claim, this includes the sales tax, depreciation, and holdback depreciation if your policy has replacement cost coverage).
- Understand the time limits your state sets for things like how long your insurance company has to notify you in writing of their decision to accept/reject a claim, and amount of time given for a payment to be made on a claim (often called a “Prompt Payment†law).
- For disputes on the settlement amount, you might be able to hire your own appraiser and get a second opinion. In these cases, there may be a requirement to hire a third party appraiser as well who will settle the difference between the two appraisers (yours and the insurance company’s).
- If your dispute is not settled with the insurance company itself, you can file a complaint with your state’s department of insurance. You will need all of the supporting documentation discussed above, which hopefully is in a filing cabinet folder ready to be used.
I hope that you never have to make a claim on an insurance policy, and if you do, that it everything moves smoothly in your favor. However, if you find yourself in the position of needing to make a claim, then the tips above will help the process along.
Have you ever made a claim with your insurance company? How did it go?