Are you seeking fair and adequate compensation for your property damage? Property insurance claim negotiations are no walk in the park. Insurance companies employ adjusters and lawyers specifically to pay out as little as possible. Homeowners often enter the process uninformed and unprepared.
In this article, we are going to highlight the legal strategies you should be considering before negotiating your next property insurance claim. But first, let’s look at the issues many homeowners face during this process:
The main issues:
Lack of preparation and legal insight leaves policyholders under-compensated. Tons of money, in fact. The good news is that with the right approach and mindset, property owners can even the playing field and walk away with the payments they deserve.
We will be covering in this article:
- Why Insurance Companies Deny Property Insurance Claims
- Preparing to Negotiate an Insurance Claim
- The Legal Advantage That Can Help You Win
- How to Document Your Claim to Win
Why Insurance Companies Deny Property Insurance Claims
The property insurance claim denial rate is staggering.
In a recent Weiss Ratings report, the 13 largest U.S. property insurers denied 47.5% of homeowner claims in 2023. That is, almost half of all closed claims received not a single penny.
And the situation is getting worse…
Not only did denial rates rise in recent years, but they have been doing so for years. In 2004, these 13 insurers reported a denial rate of 24.9%. Today the rate has surged to 37.4% across the industry.
Why are so many property insurance claims being denied?
Insurance companies have a litany of excuses for claim denial. Policy exclusions, inadequate documentation, late reporting – all of these reasons get thrown around as justifications for claim denial. Often the cost to repair the damage is simply less than the deductible. But many legitimate claims get denied for unjustified reasons.
This is exactly why having an experienced property damage attorney who understands insurance law is so important in property insurance claims assistance cases.
Preparing to Negotiate an Insurance Claim
As with most things, preparation is key in property insurance claim negotiations.
Walking into a negotiation without the proper groundwork is akin to walking into a job interview without a resume. The insurance company will have all the leverage, as you won’t even know your own standing.
Let’s go over some essential preparation steps:
- Read the entire policy before filing a claim
- Document all property damage with photographs and videos
- Obtain written repair estimates from licensed contractors
- Create a detailed timeline of all events and communication
One thing that needs to be said here…
Most homeowners do not actually read their entire insurance policy. They believe that coverage exists for certain events when it simply does not. Reading and understanding the policy coverages (and exclusions) provides a huge advantage in any negotiations that come later.
The documentation process is also critical. Take pictures from all angles. Video record everything you can. Time-stamp any evidence you collect. This provides an evidence trail that is difficult for adjusters to dispute.
Independent written repair estimates provide the real cost of repairs. Insurance adjusters have their own software programs that often underestimate the cost of repair. Having independent estimates allows for leverage in negotiations.
The Legal Advantage That Can Help You Win
Insurance claimants with legal representation receive more money, period.
According to Insurance Research Council research, claimants with legal representation receive 3.5 times more compensation on average than those without an attorney. Now that’s a significant difference!
Insurance companies are not dumb. They know what they are doing. They have highly trained and experienced adjusters, in-house lawyers, and established practices to pay out as little as possible. Policyholders going up against them alone are significantly disadvantaged.
Let’s highlight some of the advantages an attorney can provide:
- Policy language and exclusion interpretation
- Understanding of state insurance laws and regulations
- Experience in identifying and combating bad faith tactics
- Negotiation leverage with insurance companies
An attorney can recognize when an insurance company is engaging in bad faith practices. They know what the deadlines are and what evidence is most important for the claim. They also understand how to push back on low-ball offers with evidence-based counteroffers.
Coverage often becomes a major issue in property damage cases. Was the damage caused by a covered peril or an exclusion? Did the homeowner do everything reasonable to prevent additional damage? These questions require legal interpretation to answer appropriately.
How to Document Your Claim to Win
Documenting your property damage claim properly makes all the difference.
Insufficient or inadequate documentation is cited as a reason for claim denial in roughly 12% of cases. That’s a large number of potentially legitimate claims rejected for something as simple as not having the right paperwork.
Let’s cover some steps in creating a rock-solid documentation file:
- Photograph all property damage before cleanup or repairs
- Save all receipts for temporary repairs and living expenses
- Keep copies of all communication with the insurance company
- Record all phone calls when legal to do so
- Maintain a log with all important dates, names, and events
The insurance company will ask for evidence to back up your claim. Being prepared with all the documentation speeds the process along and gives you a better negotiating position.
Don’t forget to document temporary repairs. Stopping further damage with a tarp on the roof until a permanent repair can be made is a reasonable mitigation effort. The policy should cover these costs, so keep every receipt.
Documenting all communication with the insurance company is important in case the claim gets denied or disputed. Emails create a paper trail. Writing a summary after a phone call documents verbal communication. This avoids the “he said, she said” problems that can occur later.
Knowing When To Stand Your Ground
Insurance companies expect policyholders to take their first offer.
That first offer is almost never the best offer. Insurance adjusters are trained to settle claims quickly and as cheaply as possible. Standing your ground with evidence and legal support often leads to significantly more generous settlements.
The following red flags all signal it’s time to push back harder:
- The settlement offered does not fully cover actual repair costs
- The adjuster seems dismissive of legitimate damage claims
- The company starts to delay the process without reason
- Coverage gets denied for vague or questionable reasons
Patience is key here. Insurance companies often employ delay tactics in the hopes that claimants will get tired of waiting and simply take less. Understanding the game helps property owners avoid the pitfalls.
Wrapping It Up
Property insurance claim negotiations do not have to be a frustrating and losing game.
With the right preparation, thorough documentation, and legal insight, homeowners can walk away from property damage incidents with the payments they deserve. The main points to take away from this article include:
- Almost half of all claims from large insurers get denied
- Documentation is key to avoiding denial for insufficient evidence
- Legal representation leads to significantly higher payouts
- The first offer from the insurance company is rarely the best
- Understanding policy language can avoid future coverage surprises
The insurance company has entire teams of professionals working to lower their payouts. Property owners deserve the same advantage. Taking the time to properly prepare and seeking legal counsel when necessary can make all the difference in turning a denied claim into a fair settlement.
That preparation should start before any damage occurs. Read and understand the policy now to prevent surprises later. But even after the damage occurs, it’s never too late to build up a claim with proper documentation and expert support.
