How to dispute home insurance claim denials and settlements

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Dealing with damage or loss of your property can be stressful enough, but if your homeowners insurance claim is denied after filing with your insurance carrier, it can add another layer of stress. Fortunately, consumers have options for home insurance claims and settlement denials. If you find yourself in this situation, understanding the courses of action available to you to dispute a home insurance claim denial could help you get the matter resolved. Bankrate outlines four steps you could follow below.

1. Review your claim and coverage

You should review your claim and coverage as an initial step before contacting your insurer. This is important because you may not remember all the key details of your policy, including what type of damage or event is included in your coverage. When reviewing your policy, look at what events and property are included, check for any exclusions and review the claim submission process.

When checking the information you initially submitted to the insurer, ask yourself if the claim was submitted in the correct manner and with adequate supporting evidence. If you still feel the insurer misjudged your claim, you will need to properly understand the details you submitted to prepare for a follow-up conversation.

Once you are confident you understand the way the policy is written, you can call the insurance company and ask for your claim to be reviewed again or request a new examination based on new evidence. It is possible a mistake was made by an adjuster the first time around.

Tips when reviewing your coverage

As you are reviewing your policy, you may find it helpful to include the following steps during your initial review process.

  • Write out all the questions you have as you are reading through the policy.
  • Gather as much documentation as possible, including photos, eyewitness statements, videos and any other information you feel is vital.

2. Get another professional opinion

If you have requested a re-examination of your claim and the request was denied or resulted in the same denial, then it may be time for another professional opinion. As a consumer, you have the right to hire an independent appraiser or a public insurance adjuster. A public insurance adjuster is not affiliated with any particular carrier and can be hired on your behalf to help you settle a claim.

When hiring a professional, be sure to check references and recommendations. You’ll want to make sure the adjuster is licensed in the state where you are filing the claim. You should also call your state insurance department to confirm the adjuster’s record. While an independent appraiser or public adjuster may provide useful assistance, hiring one does come at an additional cost. Independent adjusters may charge up to 15% of the settlement claim and there are no guarantees the claim will be settled.

Hiring an independent party will either show support for the insurance carrier’s original denial or provide support for your claim. If the recommendation made by the public insurance adjuster supports your claim, you could consider contacting your insurance provider and requesting to speak to the claims manager. At that point, you might request the claim be reviewed once again.

Tips when contacting another insurance professional

If you do bring in an independent insurance adjuster, keep these tips in mind as you are hiring:

  • Ask for recommendations of public insurance adjusters from friends or family members who have gone through the process of having a claim denied and seeking third-party help.
  • Avoid using a public insurance adjuster who goes door-to-door to solicit business after a catastrophe.

3. File a complaint with your state’s insurance department

If you have hired a third party and the claim is still denied or offered too low of a settlement, you could register a complaint with the state insurance department. This option may be best if you feel your insurer denied your claim unfairly and would like your state insurance department to investigate the situation to ensure your insurance contract and state insurance laws were properly abided by. When you call the insurance office, you may also be made aware of additional resources you didn’t realize were an option.

4. Hire an attorney

Another option is hiring an attorney, although this route will have to be paid for out of pocket. Attorneys typically charge a consultation fee and an hourly rate for legal advice, which means the expenses can add up quickly. You will have to balance the cost of an attorney with the end result of having a claim approved — or potentially denied again — and determine if the process is worth it for you.

Tips when filing a complaint

When filing a complaint, consider the following:

  • Ask the state insurance department if there are any available resources to contact the insurance carrier directly and speak about your claim.
  • The state insurance department usually puts a time limit for carriers to respond to a claim. You can inquire if the insurance carrier responded in a timely manner.

Terms to know when disputing a home insurance claim denial or settlement

There are a few terms used in claims filing and processing that may be helpful to know up front.

Term Meaning
Appraisal An appraisal is a detailed assessment of either the property or property damage. An appraisal is written by an adjuster to estimate the amount of damage from a loss. The initial appraisal is usually provided at no charge from the insurance carrier.
Mediation Mediation is a meeting between a representative for the insurance carrier and the policyholder. A mediator will facilitate the meeting and both parties will present information regarding the claim. The goal is to find a solution for both parties.
Adjuster This is a professional hired to evaluate property damage. The adjuster will determine how much damage has occurred to the property. The adjuster will also recommend the amount to be paid out for the damages.

Reasons your home insurance claim may be denied

Although a homeowners insurance policy is designed to provide financial protection in case of damage from a covered event, there are certain circumstances where a claim may be denied, including:

  • Lack of coverage – Homeowners policies do not cover every type of event or cause of damage. Every policy will have certain covered perils and it’s possible your claim could fall under an excluded event.
  • Missed filing deadline – Insurance companies set time limits on when you are able to file a claim. This is why it is important to file a claim as soon as the damage takes place so you do not miss any critical deadlines.
  • Not enough documentation – If you failed to submit sufficient documentation, such as photos, videos or witness statements, it could result in a denial of your claim. Insurance adjusters rely on as much detail as possible for making a decision, so the more supporting evidence, the more informed a decision the adjuster can be.

Sometimes, your insurer may not deny your claim outright. Instead, a settlement could come in lower than expected. If this is the case, the same process of reviewing all related documentation, asking for another review and hiring an independent third-party investigation could be used to dispute a home insurance claim settlement offer. You could also seek the advice of an attorney before accepting a settlement amount.

Written by
Sara Coleman
Insurance Contributor
Sara Coleman has three years of experience in writing for insurance domains such as Bankrate, The Simple Dollar, Reviews.com, Coverage.com and numerous other personal finance sites. She writes about insurance products such as auto, homeowners, renters and disability.
Edited by
Insurance Editor