Making a large homeowners insurance claim can be a frustrating experience. The chances are good that the insurance company will try to minimize how much they have to pay. Although insurance companies advertise being quick to pay and generous, the opposite is often true during the claims process.
There are state and federal laws that obligate insurance companies to comply with the terms of their own policies. If they fail to do so, policyholders or claimants could bring accusations of bad faith insurance practices against the company.
Rather than overtly underpaying or openly denying valid claims, many insurance companies will instead find technicalities that excuse their refusal to pay certain parts of a claim or the low amount of their settlement offer.
What are some of the ways that an insurance company might try to underpay your insurance claim?
They offer a settlement that doesn’t cover everything
When an insurance company offers a lump-sum settlement, that means the claimant will receive one payment and then absolves the company of any future liability. If it turns out that the settlement doesn’t cover all of the expenses, the policyholder or claimant is the one left with the remaining bills.
Offering a seemingly appropriate but low settlement is a common way for insurance companies to limit what they have to pay on a significant claim. Knowing how much coverage you have for the damage to your home will make it easier for you to negotiate for a better settlement offer.
They tried to get you to admit partial fault
In situations where a policyholder or homeowner contributed to an unfavorable outcome, the insurance company may be able to reduce what they pay on a claim or even deny payment altogether.
Insurance adjusters may ask leading questions during interviews or property inspections in the hope of getting someone to admit that they didn’t properly maintain the property or if they somehow contributed to the damage through their own negligence. Saying the wrong thing to the insurance company could give them an excuse to underpay your claim.
They refuse to communicate
Whether you call the company or they ask to communicate with the contractors hired to work on your home, refusing to respond is a common strategy. By minimizing communication, they pressure you to move on from minor requests or to avoid negotiating because you expect it to be a difficult and frustrating process.
Being prepared to avoid and appropriately respond to insurance negotiation tactics can help you more easily address a dispute related to a claim.