Imagine this. A big storm knocks over a tree and punches a hole in your roof. It’s a huge mess and a major inconvenience. But at least your homeowners insurance will cover a big chunk of the cost to make things right. Or maybe you come home after work only to learn that someone has broken in and stolen your brand new laptop, a gold watch your grandmother left you and, adding insult to injury, spray painted graffiti all over the walls. It scares and angers you but, again, at least you have renters insurance to replace your losses. In either of these scenarios, you could be in for another unpleasant shock. Your homeowners insurance claim could be denied. Here’s how you can help to try to avoid a denial of claim and what to do about it should it happen.
Lack of accurate documentation can result in claim denial or receiving less than you think you’re due. You can prevent this by keeping accurate records of everything related to your policy and possessions. Take pictures of your possessions and keep receipts on file that show what you paid for them and when you purchased them. If you incur incidental expenses as a result of the damage, such as temporary lodging while your home is uninhabitable or buying plywood to cover a broken window, save those receipts. They’re reimbursable under most standard homeowners or renters policies.
Understand your policy. Read it so you know what it covers and what it doesn’t. Claimants are often surprised to learn their policy doesn’t cover damage from floods or earthquakes or that it only covers the actual cash value instead of the replacement cost in today’s dollars. Most policies also put a limit on certain items such as jewelry, artwork, firearms and computer equipment. If you buy or inherit something of value, call your insurer to learn if it will be adequately covered under your existing policy or if you need to add an endorsement.
Take Care When Filing Your Homeowners Insurance Claim
Specify the facts accurately. These include the date of the incident, the extent of the damage, the parties involved, any relevant maintenance or preventive steps you took (such as having your chimney cleaned annually, having your trees professionally trimmed or installing an alarm system) and any other pertinent information such as available witnesses or evidence that you’re a responsible homeowner. Take pictures of the damage from several different angles. Now, aren’t you glad you took pictures of everything before it was damaged for comparison?
Common Reasons Why Homeowners Insurance Claim Is Denied
As already mentioned, if a certain type of damage (often called a peril on policies) is excluded, your insurer may deny your claim. Pay attention to the way the insurance company classifies the cause of damage on your claim and make sure it is accurate.
If you fail to keep up your end of the bargain as spelled out in the obligations and conditions of coverage on your policy, your claim can be denied. Did you fail to prevent further damage? A good example of this would be not taking necessary precautions such as cutting down a rotting tree, not maintaining your property properly or allowing an attractive nuisance to exist (e.g., an unfenced swimming pool). Did you lie on your insurance policy? For example, did you claim you didn’t have any pets when in fact you own two dogs that bit the postman? Did you forget to pay your insurance premium? Some policies have a grace period, but a better precaution would be to allow your insurer to automatically deduct payments from your bank account. Some will even offer a small discount for this.
Did you wait too long to file your claim? Your policy probably stipulates a timeframe, but if you can provide a legitimate reason why you were unable to file in time (e.g., you were hospitalized) you should be able to get your claim settled satisfactorily.
Did the loss happen outside of your policy coverage period? This is specified clearly on every insurance policy and making a claim before the policy was in effect or after it has lapsed will result in denial of claim.
What to Do If Your Homeowners Insurance Claim is denied
Okay, let’s say you did get homeowners insurance claim denial. Your first instinct may be to pick up the phone and start screaming at some poor receptionist in your agent’s office, right after you finish flaming the insurance company and its customer service practices on every social media site. Don’t.
The first thing you should do is review your policy and carefully read the section referenced in your denial letter. Does it accurately describe your claim? If not, contact the adjuster and ask him to clarify the insurance company’s reasons. It’s also a good idea to document this and any subsequent conversations relative to your claim, noting the date and time, the name of the adjuster you spoke with and the gist of the conversation. Save a copy for your files and send the original to the adjuster, along with your pertinent information including your policy number. If the cause of the damage wasn’t clearly or properly communicated to the insurance company, explain the discrepancy, being as specific as possible. This is not the place, by the way, to air other grievances. Stick to the matter at hand.
It’s also entirely possible that your claim was denied because of a simple filing error. Again, call your agent or adjuster and discuss what you should do after your homeowners insurance claim get denied.
If you believe the insurance company denied your claim without cause, you can file an appeal directly with your insurance company. Contact them for the details and any necessary forms on how to do this. Understand that this can be a long, drawn-out process with no guarantee of a satisfactory outcome for you. You can do your part by providing as much written and photographic evidence as possible.
If you think your insurance company is taking an excessively long time or dealing unfairly with your claim, by all means file a complaint with your state’s Insurance Commissioner or Department of Insurance. You can also consult with an attorney whose practice emphasizes handling disputed homeowners insurance claims as a last resort.