What if home insurance refuses to compensate?
So, what to do if your insurance company refuses to pay home insurance?
Whether you’re a homeowner yourself or a landlord that has multiple buildings out on rent, home insurance is a must have.
In this day and age when natural disasters occur every other week and there are a hundred different kinds of risks that might make your home completely uninhabitable, home insurance most probably will save your life.
More of than not, if you need home insurance then that means there are some serious damages to your place. And unlike other insurances, it is completely natural to have cost upwards of $30,000 to $40,000, and this not an amount that you can just be taken out from your accumulated savings. It’s better to be safe than sorry when it comes to your humble abode, especially if you have a family.
With some advice, tips, and tricks from topremodelers.com, we wrote this article to help you in case your insurer goes back on his word.
First of all, you have to understand that Insurance companies are running a Business!
They are not doing this out of the goodness of their hearts or because they just want to help out normal folks like you and me. They are in it to make money, to return a profit for their investors and stockholders. Simple as that. They will never be concerned about you and for them, the company always comes first.
No matter the logo or whatever other cheesy line that insurance companies have on up their website, they do not care about you and me in the least. That is why every home equity contract will have certain clauses of exclusions, nullities and/or forfeitures of guarantees that the insurer can refuse to honor the claim of a declared loss if they so desire.
But the good thing is that in the land of the free, there are some requirements that have to be met for the clauses to be legally valid. For example:
- Any such clauses must be written in distinct characters
- Be extremely legible
- And be present in the general conditions of the contract.
They basically have to stand out so the reader does not miss them. But be aware, after talking to a few insurance agents over the last few years, I have found out that they do sometimes use, less than legal yet still not illegal, methods to direct your attention elsewhere.
Although none of them would ever admit to them actually doing anything like this, but they still happen every now and then. A sudden cough or a slight of hand or a gesture to redirect you to another part of the contract just when you reach one such portion of the contract is a good example.
Usually, there these exclusion clauses are of many types, such as:
- Consciously settings fire to an apartment or a building by an adult.
- In case the homeowner has not been home for a few days and a burglary takes place.
In the second case, that type of exclusion is specifically chosen by the insurer. They can argue that if the homeowner is not home for several days then he or she is making it easier for any would-be burglars. They also have requirements such as the homeowner must close all blinds and shutters whenever they leave home and not leave the keys under the doormat.
In the event an incident occurs you must:
- Notify the insurance company that manages your contract of the exact date and time of either its occurrence or discovery within five working days.
- This has to be done via a registered letter with the acknowledgment of receipt.
- Probable circumstances along with any and all evidence that you possess like purchase invoices, photos, or even testimonials if possible.
These conditions may vary depending on the insurance company, and they can easily argue that because the claim was delayed, the claim is invalid. So always be clear on what you have to do in case something does happen and always act on time. Follow the instructions to the letter, don’t give them any chance claim otherwise.
Prepare is key!
Several preventive measures can be taken that can reduce a lot of trouble and save you much needed time when something happens.
- Proof! Always keep as much proof as possible about the existence and value of your assets. Be it due water or fire damage or theft, these things will be needed by your insurance company.
- It is best that you have the value of the content of your home calculated. You can do this by yourself but I suggest hiring a professional.
- If you are leaving home for several days, move all of your precious belonging (at least the ones that can be moved) to a bank vault. These vaults can be rented and renting one a year-round is your best option.
- Install an alarm system. It doesn’t have to be anything high-end, but even a simple one that is also visible from the outside will act as a deterrent. This is especially true for urban areas.
- Normally when something happens your first reflex is to call the insurance agent, this is not a good idea. A written communication if always better as a verbal communique can be argued against and might leave you open to other issues as well.
Using an expert.
Depending on how series the problem is, your insurance agent will send an “expert” to evaluate the damages and give a quote. Your agent will insist that the agent is completely independent and will be fair in all his calculations, that is seldom true.
You can request the report by writing an official letter in case you have doubts or are opposed to the findings, and if it is not presented than an official written refusal must be taken for the proceedings.
If you are not happy with the provided expert, you can request another one or select one yourself, and depending on the contract, the insurance company may be liable to pay for his fee’s as well.
Please keep in mind that there is no “official” expert, at least in housing and basically anyone can be an expert. So choose wisely.
Know your rights!
The insurance company will most probably choose to drag the proceedings on and on for several months in the hopes that you will give in and accept a lower compensation. Of course, there are several laws in place that prevent such actions but the companies have ways around them and it is very normal for it to take more than 3 months to be settled.
If the matter drags on for too long, you can file an official complaint and if it is found that the insurer did so on purpose, then they are liable to pay for statutory damages caused by the delay with interest.
It is best you hire a mediator that is experienced in dealing with insurance company and provide all required documents as soon as possible.
Only go to court or hire a lawyer as a last resort.
Insurance companies must return the insured’s home to the state before the incident took place, or if the insured so desires, pay for the corresponding compensation for the repairs and such.
- Always try to avoid a contract that requires invoices and receipts for all of the valuables.
- Do not pay for the damages yourself, expecting the insurance to cover it at a later date.
Tips for insurance Policy:
- Get repair quotes from several different sources, preferably before the expert arrives.
- If the insurer’s expert offers an inadequate compensation, simply ask for another expert or hire another. Do not bother to argue with them.
- If your contract did not cover the disaster, threaten the liability of the insurance agent/broker for not advising otherwise. They are supposed to offer you the best possible avenue. After taking in all aspect.
- The expert has no right to take any evidence and you must all evidence of the claim yourself.
- The expert cannot go outside of the area of the incident. For example, if there was a kitchen fire, the expert can’t simply walk around your bedroom inspecting each and every little thing, no matter what he says.