Home insurance gives you peace-of-mind about owning a home because if damage is to occur, your costs will be covered. It’s a helpful protection to have as, according to the Insurance Information Institute, one out of every 15 homeowners who have home insurance file a claim each year.
But what if you file a claim and, to your surprise, your claim is denied or settled for an amount far lower than you had been expecting? What do you do next?
Here’s are the steps you can take to dispute the claim settlement.
Review your policy and claim
First things first, you want to make sure you’re fully aware of what your policy covers in terms of types of damage and monetary limits. Look over your coverage and compare it with your claim. Is there anything you overlooked that would cause your claim to be denied or underfunded?
It can also be helpful to contact your claim adjuster and ask them to explain in detail how the decision on the claim settlement was calculated. If they mention parts of the policy that resulted in a certain decision that you aren’t familiar with, ask them to refer you to the part of the policy that they’re referencing. Take notes on all the information they provide.
Once you have a thorough understanding of your coverage and how the settlement was determined, you can identify where you think a discrepancy lies, if there is one. Then, you can begin to build evidence to prove your case.
For example, if you think the cost of repairs was underestimated, you can bring in a third party expert to write you a detailed estimate. This will give you an unbiased opinion on how much you should be paid for the damage. You may also want to submit additional pictures or videos of the damage.
Contact your insurance company
Once you have gathered sufficient evidence to show why you think the claim was incorrect, you should contact an agent at your insurance company to let them know that you would like to dispute your claim. Typically, there is a dispute process that they can start for you.
Be prepared to make your case. You’ll need to explain why you think the outcome of your claim is inaccurate and will need to support it with the evidence you’ve gathered.
If the claim settlement still is unsatisfactory
If, after these steps, you still don’t get a fair claim settlement, contact your insurance company one last time and ask to speak with a supervisor. Explain the reasons why you’re not satisfied with the resolution, share what you consider a satisfactory result and ask them to review your case again.
If they insist on the existing settlement, let them know you will be taking steps to get a fair resolution, including enacting the appraisal clause and contacting your state’s insurance commissioner to file a complaint. Do your best to keep your composure, even though this can be a very frustrating process.
Enact the appraisal clause
According to the University of Tulsa College of Law, the appraisal clause is a section of your homeowner’s insurance policy contract that outlines a procedure to follow when insurers and policyholders disagree on the dollar value of a claim. This can be invoked by you or your insurance company.
The procedure requires both parties to appoint an independent appraiser to represent their interests. The two appraisers choose a third appraiser to help in the process. When two of the three appraisers agree on a value of the claim, it is resolved. Typically, you’ll have to pay for your appraiser and half of the cost of the third appraiser.
Contact your state insurance commissioner
You can also file a complaint with your state insurance commissioner, a public official in the executive branch of a U.S. state who works with the help of others in their office to regulate the insurance industry in their respective state. While their powers vary by state, the main responsibilities include ensuring insurance is available, preventing unfair practices by insurance companies, maintaining fair pricing and protecting insurance company’s solvency.
Here is a map with contact information for each state’s commissioner courtesy of the National Association of Insurance Commissioners (NAIC).
You’ll need to provide the commissioner with all of the documents and information from your claim and the dispute process. The commissioner will investigate your situation and inform you of your legal rights. If they agree that the settlement is unfair, they may take action themselves by contacting the insurance company and encouraging a fairer resolution.
They may also give you advice and instruct you to find an attorney. At this point, you will need to weigh the costs of the attorney against the amount you will gain by winning the case.
Choose your home insurance provider wisely
While home insurance should provide you with the peace-of-mind that you’ll be protected if your house is damaged, sometimes getting a fair settlement can be more difficult than you had anticipated. One thing you can do to help prevent problems is to diligently research home insurance providers before choosing one.
Be sure to look at reviews from a company’s past customers to find out about its claims process. If you see lots of people having disputes and filing complaints, keep shopping.
For an extensive list of home insurance providers and real user ratings, check out our home insurance review page.
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.