Settling a Homeowners Insurance Claim

Your home was just damaged from a severe storm. What should you do? Who should be notified? Should you file a claim with your insurance company and if so, what should you expect from them? These are just a few of the concerns expected from a home owner facing a major loss. By having a general understanding of how insurance companies handle claims prior to filing one, you’ll likely be better prepared going into the process.

Loss prevention and claims preparation tips

• Review your homeowners insurance policy and its coverages in order to understand what is and, more importantly, what isn’t covered. All homeowners insurance policies have exclusions and limitations and it’s best to know what they are prior to a loss. Often, coverage for an exclusion can be obtained through an endorsement, which “buys back” policy coverage.

• Evaluate the general condition of your property. Make repairs that might prevent future losses. Check sidewalks for deterioration and major cracks that could create a safety hazard. Roofs should be checked annually for leaks. Steps that are left in disrepair could potentially lead to a major lawsuit if someone were to fall and be injured.

• Prepare a home inventory of your personal property and belongings. Include as much detail as possible such as the date, cost, where the items were purchased (receipts are a good source for this information), brand name, model and serial numbers. Such an inventory can be a time-saver after a personal property loss and will help to speed up the claims process. OII's home inventory form is located online at: http://www.ohioinsurance.org/renters_insurance/images/inventory.pdf.

• Use a video camera to visually document each room, closet and even contents in drawers. Provide a narration while walking through each room, detailing high-ticket items such as computers and home electronics. A video serves as documentation of your possessions and the items contained in a room, especially if damaged by fire, theft or severe storm. Be sure to keep a copy of the tape off-premises in a secure place such as a safe deposit box. Photographs can serve as an alternative or as an addition to a videotape and should also be stored off-premises.

The claims process

To file or not to file a claim—that is the question...Following a property loss, contact your insurance agent or company representative with loss details as soon as possible. Discuss the chain of events with your insurance professional and determine if a claim should be filed. You might consider obtaining a contractor estimate to provide a damage assessment prior to filing a claim. Many consumers select high deductibles ($500, $1,000 or more) as a cost-savings measure. You may consider not filing a claim if the amount of the loss is close to your policy deductible or if you’ve filed multiple claims in recent years. Your insurance professional can provide guidance on what’s best for you.

If you are filing a claim, the company should provide information regarding the claims process.

The insurance company will ask you to complete claim forms regarding the loss, which includes detailing your missing or damaged possessions. Having prior documentation of your personal property (through a video tape, an inventory list and/or photos) can greatly assist with the claims filing.

The insurer will assign a claims adjuster to work with you. Depending on the extent of the loss, the adjuster may conduct a personal interview regarding the claim, request an inspection of the damages for a loss assessment and possibly ask for a copy of an itemized list of the damaged property. The adjuster may want to tape record discussions regarding your claim.

Keep your insurer notified of any developments associated with a claim. For instance, if someone is injured on your property and you receive legal documents from the other party, contact your company immediately. Keep in mind that homeowners insurance provides legal defense coverage if sued as a result of such a claim.

In situations where property damage is extensive, try to protect against further losses by making temporary repairs. For example, if a tree falls and damages your roof, cover the hole with wood or plastic. Keep receipts associated with such repairs. These may be reimbursable under your homeowners insurance.

If a loss forces you to obtain a temporary residence, be sure to inform the insurance company. Most homeowners insurance policies also cover this under “additional living expenses.”

Don’t throw damaged property away unless instructed to do so by the adjuster. To save time, you may start obtaining written repair bids from licensed contractors. However, repairs should not begin without prior approval from your insurer.

Other claims settling tips

• Track all expenses associated with the loss. They may be reimbursable under your homeowners insurance policy. Examples could include mileage and meal expenses if called into court for the claim or temporary repairs made to protect against additional damage.

• Keep copies of all your paperwork for future reference.

• Don’t start permanent repairs until the insurance company claims adjuster has assessed the damage and you’ve been given the go-ahead.

• You have the right to choose the contractor. Your insurer may provide you with a list of pre-approved contractors to save time and hassle, or you may be asked to obtain written estimates from a few licensed contractors of your own choosing. Regardless of the procedure, the policyholder has the final say in contractor selection.

• You have the right to negotiate the settlement. If you’re having a difficult time with the adjuster, contact the company directly and ask to speak with the consumer services department or the claims division manager. If you still find the settlement unacceptable, follow the appraisal procedure outlined in the insurance policy. Most appraisal procedures work by you hiring an independent appraiser at your expense. Once the appraiser reaches an agreement, the claim is settled at that amount.

• If you feel that you’ve exhausted all efforts with the insurance company, call the Ohio Department of Insurance Consumer Hotline at 1-800-686-1526. The department, which regulates all insurance agents and companies within the state, will provide you with information and advice on how to proceed.

• If you still can’t reach an agreement, you always have the option of seeking outside legal advice. Remember, you are responsible for these legal fees. But by obtaining legal counsel you sacrifice the ability to represent yourself directly with the insurance company. All future correspondence regarding the claim is then handled through your attorney.

Choosing a contractor

Before you arrange for repairs, guard yourself against dishonest contractors:

• Obtain more than one estimate. Don’t be bullied into signing the first contract that is presented to you.

• Obtain all information in writing, including cost, work to be completed, repair time and payment schedules, contractor guarantees—and make sure all details are provided.

• Ask for references and check them.

• Ask for the contractor’s drivers license and write the number down along with a description of the vehicle and license plate number. Many times contractors come into disaster areas from out of state when damage is widespread.

• Never sign an incomplete or blank contract.

• Don’t pay for the repairs or sign a certificate of completion until all work has been completed in accordance with the contract specifications.

• Don’t be tempted to conspire in a fraudulent insurance claim. Insurance fraud is a felony. Disaster repairs often heighten the opportunity for insurance fraud and abuse. Also, be aware that insurance coverage may be void if a policyholder’s intentional misrepresentation is discovered.

Portions excerpted from National Insurance Crime Bureau, Don’t be Victimized Twice: Avoid Disaster Fraud

Between 1994–2002, the homeownership rate rose from 65.7% to 70.3% for all native-born residents, regardless of race or ethnicity; from 66.8% to 67.6% among naturalized citizens; and from 32.9% to 34.9% among noncitizens. About 63% of foreign-born Hispanics who are naturalized citizens owned their homes in 2002, compared with about 54% of Hispanics born in the US. (US Census Bureau)