The 3 Biggest Challenges of Managing Your Homeowners Insurance Claim

Going through an event that causes damage to your property is unpleasant. Unfortunately, the challenges of managing your homeowners insurance claim can be just as unpleasant. 

The three biggest challenges you might encounter are:

1. Not understanding the fine print in your policy.

2. Dealing with an insurance adjuster.

3. Dealing with contractors.

In this article, we’ll examine the above challenges in more detail and offer suggestions on how they can be resolved.

Challenges of managing your homeowners insurance claim

Trying to manage your homeowners insurance claim on your own can be frustrating, hard, and time-consuming.

1. Not Understanding the Fine Print In Your Policy

Most homeowners don’t take the time to carefully read through their homeowners insurance policy once they receive it. They just skim over the fine print and don’t ask any questions or seek clarification on clauses they don’t understand.

For example, they know they’re covered against water damage. They assume it means they’re automatically covered for damage caused by a sewer backup and flood. What they don’t know is that an event such as flood damage isn’t covered in a standard homeowners insurance policy.

Make Sure You Understand Your Homeowners Insurance Policy

Make sure you know what you’re entitled to. Here are some things to look out for.

Does the fine print make sense to you?

If you’re not sure what something means, don’t make your own assumptions. Get clarification in writing from your insurance company. If you’re not sure about what’s the right question to ask or feel your insurance company isn’t being straight with you, get a second opinion.

Approaching a public adjuster is a good idea. A public adjuster looks after your best interests instead of the best interests of your insurance company. A reputable, experienced public adjuster can save you a lot of time and money.

Are you insured for actual cash value (ACV) or replacement value?

If your possessions are destroyed, such as in the event of a fire, will your insurance settlement be enough to replace everything you’ve lost?

Many homeowners are only insured for the actual cash value of items. They will be paid out the cash value but normally it won’t be enough to replace the items.

If you think you’re insured for replacement value while you’re actually only insured for the cash value of an item, you’re going to be very disappointed!

Do you have sufficient Additional Living Expense (ALE) cover?

ALE is an expense you typically have to incur due to the destruction or damage of your property.

For example, if your property is badly damaged you may have to rent elsewhere while the damage is being repaired. You may have to board your pet, spend money on a laundromat service, travel further to work every day, etc.

Ask your insurance company to advise you in writing what expenses are covered or will be reimbursed. Most policies will contain a dollar limit and/or time limit.

Note: It might take 24 months or longer for a house to be rebuilt.

Is your policy up to date?

If you’ve done some renovations to your property or acquired some more possessions, you may no longer be insured for the correct amount.

Being underinsured may cost you a lot of money! Review your policy on a regular basis and make sure it stays up to date.

2. Dealing With an Insurance Adjuster

When you submit a claim to your insurance company they will appoint an insurance adjuster. It’s the job of the insurance adjuster to act in the best interests of your insurance company. They’ll do what they can to save your insurance company money.

The insurance adjuster has no obligation to look after your best interests and won’t do you any favors at the expense of your insurance company.

Insurance adjusters typically have years of experience negotiating settlement offers. They know the ins and outs of your insurance policy. They know and understand all the fine print. By using the services of a public adjuster you can level out the playing field.

How to Deal With an Insurance Adjuster

Here are some tips on how to deal with an insurance adjuster.

An insurance adjuster is not your friend or enemy

It’s important to understand the insurance adjuster is appointed and paid for by your insurance company. They care about the company’s clients but are loyal to their employer.

Be polite and respectful towards the insurance adjuster, knowing it’s not their job to get you the best possible settlement offer. Being rude or arrogant will not help your cause and may only make matters worse.

It’s a negotiation!

You don’t have to accept the first settlement offer you receive. Don’t feel pressured! If you think it’s not a fair offer, motivate why it should be improved.

Not everyone has good negotiation skills. If you’re not making headway and feel you’re banging your head against a brick wall, get help. Ask a reputable and experienced public adjuster to get involved and let them negotiate on your behalf.

Don’t only rely on the insurance adjuster to calculate your losses

Relying solely on an insurance adjuster to calculate your losses is a mistake. An insurance adjuster will always try to find the best deal for your insurance company. This is often not the best deal for you!

Take flooring tiles as an example. They come in all shapes and sizes, and prices can vary a lot depending on quality. Don’t just accept the figure the insurance adjuster calculated. Ask how it was calculated. It’s unlikely you’ll find the exact same tiles you had but that doesn’t mean you have to settle for inferior quality tiles.

Do your own homework. Get your own quotes and negotiate with the insurance adjuster.

Have a home inventory

Your insurance adjuster will require a detailed list of items that were damaged, destroyed, or stolen. It will help a lot if you’re able to show receipts for the items, or at least photographs if you don’t have receipts.

You may also be asked what it would cost to replace the items. Work with the insurance adjuster and provide all of the requested information timeously.

A common mistake many people make is to throw away damaged items, or to clean up too fast. It’s normal that you may want to clean up a mess as soon as possible. However, by doing so you risk destroying evidence that supports your claim.

Tip: Store copies of receipts at another location besides your home. It’s always good to have a backup in case something happens to the original receipts.

Repair vs Replace

If you have a policy that allows for the replacement of damaged items, it normally makes sense to have them replaced instead of repaired. However, if it’s cheaper to repair an item than to replace it, it’s very likely your insurance adjuster will only be willing to pay for repairs.

In the above scenario, you’ll have to motivate why an item should be replaced instead of being repaired. Get quotes (at least three) on how much it would cost to replace and repair the item. Repair quotes should mention whether or not the repairs are guaranteed to work and for how long the repairs should last. 

If you can prove that repairing an item is risky and may not last long, you have a strong case to motivate why it should be replaced instead.

3. Dealing With Contractors

Dealing with contractors is often the most challenging part of an insurance claim.

There are so many things that could go wrong or end up in a dispute. It falls outside the scope of this article to try to cover all the eventualities.

You need someone to back you up, especially if you’re dealing with multiple contractors or have suffered extensive damages. Making use of the services of a public adjuster can save you a lot of headaches!

Conclusion

The three biggest challenges of managing your homeowners insurance claim are:

1. Not understanding the fine print in your policy.

2. Dealing with an insurance adjuster.

3. Dealing with contractors.

This does not imply that there are no other challenges you have to deal with. The problem with insurance claims is it’s often difficult to predict what’s going to happen. No two claims are exactly the same and things don’t always go according to plan.

If you have a small claim such as a burst pipe that caused little to no damage, it makes sense to manage the claim on your own. However, if you’ve suffered a lot of damage and are dealing with a potentially complicated claim, it’s best to get expert help and advice.

This is especially the case if you don’t have the time, skills or experience to manage the claim by yourself. Using a public adjuster can save you a lot of time and money.

Avner Gat, Inc. has over 15 years of experience as a public adjuster in and around Los Angeles. We protect homeowners from the games and fine print that insurance companies are known for.

Call us at (818) 917-5256 and let’s talk about how we can assist you with your homeowners insurance claim.