What should I do if my homeowners insurance claim is denied?

You assume you are covered, call your agent, file a claim, only to get a letter in the mail a few days later denying your claim.

In the event of a major burglary, fire, flood or other disaster that severely damages your home, one of the first thoughts that will probably go through your head is about your insurance policy. You assume you are covered, call your agent, file a claim, only to get a letter in the mail a few days later denying your claim.

While you may want to call up your insurer and give them a piece of your mind or sit down and dissolve in a pool of tears, none of these are a good idea.

Your first move should be to pull out your policy and give it a good read 

Review Your Policy

Unfortunately, the majority of us never read our policy in its entirety until it becomes a necessity. This is often a mistake, fully understanding your coverage is extremely important in the world of insurance.

There can be many reasons for a denial of claim. Here are just a few reasons that your insurer may have denied your claim:

• Peril that is not covered
• Not taking sufficient preventative measures (home maintenance)
• Improper or insufficient documentation of the damage to your home

Read your policy carefully and look for the section that deals with your particular reason for denial. If you lack a copy of your policy or cannot locate the relevant section, contact your agent for clarification.

The insurers reasoning

The adjuster will send a letter that details their reasoning for the denial. The letter should contain the section of your policy that contains the back up for the denial. This is a legal obligation for the insurance company so if you do not receive this documentation, contact your agent or adjuster and request it.

At this point you need to look closely at the reasoning for the denial and compare it to your policy. Look for discrepancies or areas where the adjuster may not have all of the facts or not fully understand what happened to your home. Is there further evidence you can provide, better photographs or a more detailed explanation of the claim?

If you find the denial to be unclear or you disagree with the reasoning, ask the adjuster for clarification. Keep scrupulous notes of any contact with your agent or adjuster. Document names, dates and times and what was discussed.

Appeal

If you feel the denial is incorrect or unfair, its time to file an appeal. It is important that you have a reasonable rebuttal to the denial. It is often a good idea to ask a trusted but impartial friend or colleague to listen to your case and make sure that it makes sense and is a legitimate appeal. In most cases your friend’s insight will help you clarify your position and possibly highlight issues you have not considered.

Expect the process to proceed slowly. Request a resolution date from your adjuster and follow-up on a regular basis.

Take it Further

There is a good chance that your appeal will be denied. If this happens, don’t lose faith just yet, there are other avenues you can pursue.

• Request a meeting with your adjuster’s superior to discuss your claim and why you feel the denial is unfair.
• File a complaint with the insurance regulatory agency in your state. (NAIC.org)

If you still have not gotten a satisfactory response or settlement to your claim, the final option is to talk to an attorney. They should be able to determine if you have a legitimate claim and what your chances for success would be in court. Keep in mind the cost in both time and legal fees and determine if moving forward makes financial sense.

Prevention is the best medicine

The best way to fight a claim denial is not to get one in the first place. Carefully read your policy and understand all of your obligations in regards to the upkeep of your property. Make note of what is not covered and if you feel it is possible you could suffer that type of loss (think flood or earthquake) it is best to buy a supplemental policy.

A proper and complete home inventory will make a claim go more efficiently and will ensure accuracy. There are a number of smartphone apps that make this process quick and painless.