23 Sep 8 Steps to Navigate the Homeowner’s Insurance Claim Nightmare
Filing a homeowner’s insurance claim after suffering damage should provide homeowners peace of mind.
Unfortunately, the process is often complicated and stressful.
For instance, many insurance companies are short on workers, so when a natural disaster, such as a hurricane, hits an area, they don’t have enough workers to manage the large number of claims. To fill the gap, the companies will hire part-time workers with little or no experience in the field of insurance.
More often than not, there is the additional problem of not having enough contractors in an area to manage all the needed repairs.
Plus, we are still dealing with supply constraints, so insurance claims drag on longer than needed.
Considering all these issues, it’s easy to see why the homeowner’s insurance claim nightmare is real.
But that doesn’t include the nightmare of having the insurance company not wanting to give you enough money to cover the cost of damage and repairs.
Read on to see how to navigate the homeowner’s insurance claim nightmare.
My Personal Homeowner’s Insurance Claim Nightmare
Before we jump into the actual process of how to navigate the claims process, I’d like to share a personal homeowner’s insurance claim nightmare.
One thing you should know is that, in addition to being a financial advisor, I own an insurance agency.
Recently, my home suffered serious hail damage (3 inches of hail at 3 a.m.). I did everything I know to do as the owner of an insurance agency.
- I made a video of the hail and documented the damage.
- I filed a claim.
- I received the anticipated lowball offer from the insurance adjuster, which was less than a claim five years earlier on a smaller roof.
- I hired a contractor who then submitted his estimate, which was $12k higher than the lowball offer.
- I watched a series of emails about the cost between the insurance company and the contractor for a week.
Then, I received a “reservation of rights” letter, which basically stated the insurance company has reserved its right to deny coverage at a later date.
I was frustrated, but I knew this was part of the homeowner’s insurance claim nightmare process.
So, I responded with my facts, and the insurance adjuster set up a competitive bid for my claim.
The insurer sent their own contractor to do the job at their negotiated rate, not my roofer’s rate! I denied them access to my property and called my adjuster.
At this point, I let the insurance adjuster know I own an insurance agency, and surprise, surprise, the coverage changed.
I share this story to show that I know how insurance companies treat regular clients – not fellow owners.
From my years in the insurance business and my own personal homeowner’s insurance claim nightmare, I can help you walk through the stressful situation in a way to protect yourself, your home, and your family.
The Steps in the Homeowner’s Insurance Claim Process
Should your home suffer damage from a winter storm, fire, or another disaster, these are the steps you will need to take.
1. Get Safe
The first step you should take in any insurance claim process is to make sure you and your family are safe. This should be your number one priority.
2. Report the Loss
Next, report the loss to your insurance company. All insurers have a dedicated claims line for you to call.
If you don’t have this number, contact your agent to assist you in filing your claim. This is much quicker than dealing with customer service because you won’t be put on hold trying to reach the right person.
3. Document Your Loss
Protect yourself during the claims process by documenting the damage. Take pictures or make videos of all the damages that have occurred during this loss claim before cleaning up any of the damage.
Put these items into a personal inventory list. Don’t disregard small items because all your stuff has value.
The more documentation you can provide, the more valuable it will be in the future should the insurer push back against your claim. Document everything you can, just in case.
4. Insurer Assigns Adjuster to Investigate the Loss
At this point, an adjuster will call you and give you all the information you need to contact him/her during the claims process.
The adjustor will review your policy to verify your coverage and determine what your deductible will be.
Then, the adjustor will come and inspect your home to assess the damages.
This is when the amount of damage is determined, and a written estimate of your claim is provided to you. If you don’t understand the estimate, ASK!
If it looks like a lowball offer, don’t do anything yet. Continue through the eight steps.
5. Insurer Makes Initial Payment
Next, you will receive the initial claims check, which should be in the estimated amount your adjuster provides you with.
The initial claims check is normally made payable to you and your mortgage company (if you have one), minus your deductible. You can’t just go deposit the check. Both you and your mortgage company must sign the back of the check for it to be deposited into your bank account.
Because your mortgage company is involved, it is necessary to contact them to see their process for signing this check.
Once all parties have signed the check, it may be deposited.
6. You Hire a Contractor
Now that you have the initial claims check, it is time to hire a contractor. What you may not understand is that you have the right to choose a contractor – not the insurance company!
Some insurance companies may try to push their approved contractors, but whom you hire is your decision.
Get a written estimate from the contractor and submit it to your insurer as soon as possible. Expect there to be a difference between your contractor’s estimate and your insurer’s.
7. Contractor Sends in Supplemental Costs to Insurer
Once the contractor assesses your damage, he or she will send in any supplemental costs to your insurer for review.
Your insurer will work with your contractor to determine if these supplementals are in line with normal costs of repair.
The insurer pays the contractor (or you) the difference (or they may dispute the costs).
8. The Work Is Completed
Finally, your contractor completes the job.
Now, you pay the contractor any amount your insurance company has paid you, as well as your deductible.
What to Do If the Insurance Company Pushes Back
In an ideal situation, the insurer and the contractor will work out cost discrepancies.
However, there are times (like my own personal homeowner’s insurance claim nightmare) when insurance companies push back and deny claims or give low estimates.
If the insurer disputes the supplemental costs from the contractor, the insurer may ask that an independent appraiser come in to settle the dispute.
You may also hire a public adjuster, who works for you, and not the insurance company.
It works like a mediation process.
Tips for Making the Claims Process Smooth
The best way to protect yourself from a homeowner’s insurance claim nightmare is to know and understand your homeowner’s insurance policy.
According to Value Penguin, “47% of homeowners are unsure of what their insurance covers.”
You need to be familiar with what is covered and what is not covered. Know the name of your insurance agent and how to reach him or her in the event of an emergency.
Additionally, I cannot stress the importance of documentation enough. Document everything!
- Document photos of the rooms in your home so you have them for before photos in the event of an emergency.
- Document every person you speak to on the phone including the original claims associate, your agent, your adjuster, and so on. Document when you called and how long you were on the phone. Document what you were told.
- Document interactions with your contractor.
- Save your emails.
This is your home on the line, so make it a point to understand your policy and stay involved throughout the entire homeowner’s insurance claim process.