Disputing a Home Insurance Claim Denial or Settlement Offer
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If you think your homeowners insurance claim was wrongfully denied by your insurance company or you were offered an excessively low payout, you have options. Overall, your strategy should be to present additional evidence for your case and escalate the dispute in steps, but only until the costs of doing so are outweighed by the potential benefit.
Steps to dispute a home insurance claim:
Step 1: Contact your insurance agent or company again
Before you contact your insurance agent or home insurance company to dispute a claim, you should review the claim you initially filed. Consider whether you can improve the quality of evidence showing damage or loss, which can have a huge impact on the settlement.
After looking over your initial paperwork, call and speak to either your agent or the company's claims department about the adjuster's estimate. Remember, an adjuster from the company calculated the estimate, not your agent or the person who answers your call.
Ask if your claim can be reviewed again based on new evidence or the adjuster can reexamine the damaged property. Mistakes happen, and it's possible the adjuster miscalculated the estimate. The company might review it again, but that doesn't mean the settlement offer will change. They may not even agree to an evaluation by another adjuster. If that's the case, the next step is to get a third-party appraisal.
Step 2: Consider an independent appraisal
Hiring your own appraiser or public insurance adjuster allows you to get an independent repair estimate for the damage. Depending on how far they are from your home, a private appraiser or adjuster costs roughly $200 to $500. If the difference between the claim settlement offer — or the denial — and the amount you're seeking is about equal to the cost of the independent appraisal, it may be more cost effective to take the settlement.
A second estimate will either confirm the accuracy of your insurance company's settlement offer or support your argument for raising it. If the result is in your favor, contact your insurance agent or claims department again and tell them about the independent estimate. You may want to ask to speak to a claims manager and have them evaluate your case.
Step 3: File a complaint and hire an attorney
Claim disputes rarely make it to this stage. If you are unable to reach an agreement with your insurance company and the previous options did not work, there are only two other things you can do: File a complaint with the state and speak to an attorney.
You can report what you believe is mistreatment or bad business practices to your state insurance department. They should investigate your claim and provide you with advice on what to do next. The department typically evaluates whether your complaint is justified. If so, they will reach out to your insurance company to encourage a fair resolution.
The state insurance department might suggest hiring an attorney, but they don't help pay for that expense. This makes it important to weigh the costs and potential benefits of legal action. You will need to find a lawyer and pay a consultation fee and whatever additional rate they charge. If you hire an attorney, make sure the fees are spelled out up front.
Note on disputing natural disaster claims
Most insurance companies handle natural disaster claims the same as any other claim — as quickly and accurately as possible. However, disasters often lead to an influx of claims, which can make it challenging for insurance companies to respond in a timely fashion.
For this reason, state insurance departments usually set special dates for insurance companies to acknowledge a claim has been filed. Typically, the cutoff is 15 days, but that is usually extended.
A higher volume of claims might also force insurance adjusters to make rough estimates. If this occurs, you should be notified and expect a second visit from an adjuster at a later date. Make the second appointment during the first one if you can.
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