Can a Home Insurance Lawyer Help With Underpaid Claims?

Find out if a home insurance lawyer can help you with navigating underpaid insurance claims.

What Is Home Insurance?

According to insurance.com, home insurance policies can provide coverage for damage to a home by weather events, fire, or even burglary. If a home is damaged, the homeowner will be reimbursed for the costs of fixing the home, not including their deductible, along with other expenses depending on the policy.

Home insurance is important – it gives homeowners peace of mind when it comes to what is likely one of their most valuable assets. In addition, most mortgage companies require homeowners insurance.

Underpaid Insurance Claims

Some consumers say that their insurance company underpaid claims, however. Indeed, experts say that it is more likely that an insurance company will underpay your claims, rather than deny them outright. Policyholders are less likely to fight an underpaid claim, say the experts, and may let the insurance company get away with a lowball offer. In addition, some homeowners may not know that underpaid claims can be disputed.

Underpaying homeowner insurance claims results in huge cost savings for insurance companies, making it important to review offers closely. Insurance companies use several methods to underpay claims, according to home insurance lawyers.

First, the company may not properly assess the damage. If the insurance company’s claims adjuster does not get accurate information, the claim may be underpaid. In addition, the company may read their own contract incorrectly. Homeowners should understand the terms of their policy to ensure they are getting a proper payment from their insurer.

In addition, some insurance companies have been accused of improperly depreciating aspects of homeowner insurance claims, such as labor costs, under “replacement cost” insurance policies. Under these policies, insurance companies pay only the “actual cash value” of the damaged property. This allows them to factor in depreciation of the home or other property that is damaged. However, some companies have allegedly been lumping materials and labor costs together when calculating the depreciation on a claim.

Home insurance lawyers say that it is important for homeowners to fight underpaid claims. Accepting underpaid claims from insurance companies lets them know that they can keep getting away with taking advantage of homeowners who are in desperate situations.

Home Insurance Claim Disputes

Experts say that if a homeowner is hit with an underpaid claim by their insurance company, they should first review their policy and understand what it covers, as well as the maximum it will pay. They can then ask the insurance company how it calculated their claim.

At this point, the insurance company may “discover” that they miscalculated the claim; however, some may stand by the underpayment. Homeowners can hire their own independent claims adjuster to fight the insurance company’s assessment. If the private adjuster supports the homeowner’s claim, then this information should be presented to the insurance company as well.

Throughout this process, experts say that it is vital for the homeowner to keep all correspondence from the insurance company, including emails and call records, in addition to any letters.

Can a Home Insurance Lawyer Help?

If the insurance company continues to deny that they are underpaying the home insurance claim, it may be time to hire a home insurance lawyer. A home insurance lawyer can take the underpaid claim all the way to court where, in addition to the full amount of the claim, a judge can award additional amounts for the delay of the payment and for the emotional toll the underpaid claim took on the homeowner, along with attorney fees.

Underpaid Insurance Claim Lawsuits

Indeed, a number of insurance companies have been hit with lawsuits over underpaid claims. Just this year, State Farm and Casualty Insurance Co. faced a class action lawsuit alleging the companies shorted 65,000 policyholders with underpaid homeowners insurance claims. According to the complaint, the companies have been including labor costs in their depreciation calculations. The plaintiffs say that this method has been shorting homeowners tens of thousands of dollars and garnering the companies millions.

The Claims Journal reports that home insurance lawyers have been successful in convincing the district court that depreciating labor costs is wrong and, since that ruling, State Farm has changed how it calculates those costs.

A similar class action lawsuit was lodged in Tennessee by homeowners who said that Auto-Owners (Mutual) Insurance Company underpaid their claims. In that case, the Tennessee Supreme Court came down on the side of the plaintiffs, ruling that insurance companies can’t depreciate labor costs in insurance payments for homeowners insurance claims.