After a fire or a natural disaster, people turn to their insurance company to be reimbursed for damaged homes, businesses and possessions. But you may lose out on money you could receive if you aren’t prepared prove the extent of your losses.
Steps To Take Before Disaster Strikes Can Help Your Financial Recovery Afterward
This post provides tips on what to do before disaster strikes to smooth the insurance settlement process. You want to be fully reimbursed for the true value of your loss from your homeowner’s insurance, renter’s insurance, or specialty insurance policy (like flood insurance or riders for high-value items or business property located in the home).
If you’ve wrongly received an insurance claim denial, or the insurance adjustor is undervaluing your property, you may need to get a consumer protection attorney involved.
What Will Your Property Insurance Policy Pay?
Pull out your insurance policy and take a look at your property insurance coverage. There is an overview sheet that will show you the value of your home for insurance purposes, as well as the value of personal property. If your home is lost to a fire, tornado, storm (or flood, if you have flood insurance), you need to know what the insurer will pay.
Your policy may insure your home to a specific dollar value. Regardless of what your home is worth right now, that is the value you will be paid. That may be the value of the home when you first took out your policy. If you have a good agent, that value is updated regularly.
You may have a policy that pays an Extended Value or Guaranteed Replacement Cost. In this case, the insurance company has agreed to rebuild your house to the state it was prior to being destroyed. If it now costs more to rebuild your exact house, the insurer will pay more (usually up to a certain limit).
Your insurance policy will state a dollar amount for Contents/Personal Property. Usually this is a percentage of the value of your home coverage (about 70%). That may or may not cover it.
Are you being reimbursed for actual cash value or replacement cost of your personal property losses?
- Most policies pay for replacement cost, which is the actual cost of replacing the items. The insurance company will send you an initial check. You purchase new items. Then send the receipts to the insurer with a request for any additional unpaid amount.
- Some policies pay for the actual cash value of the items lost. The adjustor depreciates the items for age and condition. Sometimes the adjustor depreciates too much. Depreciation is negotiable. Ask to see a copy of the insurers’ depreciation schedule.
Proving Value for a Property Insurance Claim
Creating a household inventory is the best way to prove the existence, and value, of personal property. Some insurance companies provide customers with an electronic inventory program they can use to gather and store information. You can find a list of home inventory apps at Forbes Advisor. But you can also do this just with a paper, pen and a camera. Learn more at the Insurance Information Institute.
Before Disaster Strikes
Document Your Possessions: Go room by room and make a list of everything you own. Describe the items to the extent you can, including date of purchase, model or serial number, brand, purchase price, and any other pertinent information. Unsure of the value? You can use the internet to look up the price of items.
You may wish to do this once a year to ensure you haven’t forgotten to include new property.
Adjustors often ask for receipts for higher-value items. Policyholders often don’t have them. Do you need to provide a receipt? Yes and no.
As a policyholder, you have an obligation to cooperate with the insurance company’s investigation. While an insurance company can’t deny your claim because you can’t produce a receipt, they could investigate further and this could cause delays. If you have receipts, you should provide them.
When a home or business is a total loss, receipts are usually lost, too. With some advance planning you can protect this information. Take a photo of the sales receipt or purchasing contract or written appraisal for any item of significant value. Store this information in the Cloud or put it on a thumb drive in a safety deposit box (or another place away from home).
Take Photographs: Take pictures of your home and personal property in natural light and from multiple angles. You could also videotape your property as you tour it, narrating information about the possessions on the video. Photos and video can be used to demonstrate ownership and condition. They will help jog your memory when you need to provide the insurance company with an inventory. Again, store those photos in the Cloud, or in a safety deposit box.
After Disaster Strikes
Store Items: Do not throw away damaged items until you have been fully compensated. The insurance company may need to inspect them. Store them in a basement or garage, or even a rented storage unit. If possible, secure them so they can’t become more damaged while in storage.
Document Living Costs While Away from Home: If you can’t live in your home while repairs or rebuilding is taking place, your insurance policy may entitle you to be reimbursed for temporary living expenses. Document your expenses for hotels or home rental, meals, car rental, etc. Photograph those receipts as well.
Working With A Property Insurance Company
Report your loss as soon as possible to your insurance agent or insurance company. Keep track of every interaction you have with the insurance company in a notebook or file. If there is a problem with your insurance claim later, your notes may be valuable to proving your case.
- When did you notify your agent of a claim? When did you receive confirmation that your claim had been received (put the letter in your notebook)?
- When did you send proof? What did you send?
- Did you have phone conversations? What was said?
- Copy emails and put them into the notebook.
- When did you have visits from an adjustor, a contractor, etc.?
- What did the adjustor say and what did they agree to?
You may be asked to give a recorded or sworn statement in an Examination Under Oath. You may wish to talk to an attorney before you do so. Either way, make a recording for yourself and keep it. (You can do so with your cell phone).
In some instances, you may be asked to provide tax returns to prove you had the ability to purchase a high-value item. You are not legally required to give your insurer your tax returns.
Now begin working on your inventory. Remember, the goal of the insurance adjustor is to control the amount of money that gets paid on a claim. You want to maximize your claim in all ways that are legal. Documentation and organization will help you do so.
If You Need Help, Contact an Insureds Lawyer
If you believe you are being underpaid or unreasonably delayed by your insurance company, talk to a consumer protection attorney. The Fell Law Firm can help. Call 972-450-1418 or complete our online contact form to schedule a consultation.