Disputing a Home Insurance Claim Denial or Settlement Offer

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If you filed a homeowners insurance claim and feel your insurer should pay more than they estimated, or wrongfully denied your claim, you aren’t helpless. This guide will walk you through the process of disputing a claim offer or claim denial, and help you make sure your settlement is fair.

It's common for insurance companies and their policyholders to come into conflict over compensation in a loss. Policyholders pay premiums and expect all of their claims to be paid in full when their time of need arrives. Meanwhile, insurance companies are financially motivated to pay as little as possible in claims, which directly affect their profit and ultimately affect the cost of premiums. But that doesn’t mean companies are always trying to lowball you. Both parties often just need to share more information with one another to come to an agreement, or at least an understanding behind a settlement.

Step 1: Contact your insurance agent or company

Before you contact your insurance agent or home insurance company you should review the claim you initially filed. Consider if there is any way you can improve it. The quality of evidence showing damage or a loss can have a significant impact on the claim settlement. For example, perhaps you only submitted one photo of wind damage to your roof and siding. You should have more photos ready to submit and bolster your case for the amount you claimed. And this applies to anything you could potentially file a claim for. Photos, videos, repair estimates and receipts for items are all materials you should organize before reconnecting with your agent or company, assuming you didn’t include them in your initial claim.

After analyzing your initial claim paperwork, call and speak to either your agent or company’s claims department about the estimate you received from the adjuster. Remember that an adjuster from the company calculated the estimate, not your agent or the person you’ll speak to. Be polite, listen to what they have to say and follow any instructions they give you regarding a claim dispute.

Ask them if your claim can be reviewed again based on your new evidence, or if the adjuster can reexamine the property damaged or lost. Mistakes happen and it’s possible an adjuster miscalculated the estimate. A company might review it again but that doesn’t mean their settlement offer will change. They might not even agree to have another adjuster evaluate your damage or loss. If that’s the case, don’t run out and hire an attorney yet.

Step 2: Consider an independent appraisal if your insurer won’t pay more

Consider hiring your own appraiser or home insurance adjuster to get an independent estimate. Depending on how far they have to travel to your home, a private appraiser or insurance adjuster will cost roughly between $200 and $500. This may or may not be worth the money. For example, if the discrepancy in the claim settlement is roughly equal to the cost of the independent appraisal, you might want to consider saving your time and money and accepting the insurer's settlement.

A second professional opinion of the damages or loss will do one of two things: either the new estimate will affirm your insurance company’s settlement offer or help you leverage them to change it. Hopefully the circumstance is the latter and you can use the independent estimate to argue in favor of your initial claim. Contact your insurance agent or claims department again and tell them about the independent estimate. You might even want to ask to speak to a claims manager and ask that they evaluate your case.

Step 3: File a complaint and hire an attorney (if your claim amount is high enough)

Claim disputes rarely make it to this stage. If you are unable to reach an agreement on a claim with your home insurance company, and have exhausted all of the above options, there are only two other things you can do.

Policyholders can report what they feel is mistreatment or bad business practices to their state insurance department. The department should investigate your claim and provide you advice on what step to take next. They typically evaluate whether your complaint is justified, and if so, will reach out to your insurance provider through its own channels, and encourage a fairer resolution.

The department might suggest hiring an attorney but it will not share any cost of that expense. You will bear that burden on your own and it’s important to consider that cost when deciding whether to pursue a case. You will need to find an attorney, pay a consultation fee and whatever additional rate they charge. Should you choose to hire an attorney, make sure a fee structure is in place. It is only worth the headache, delay, and financial dent if the denial or disputed settlement offer is off by $1,000+.

Note on disputing natural disaster claims

Policyholders dispute natural disaster claims the same way they would any other claim - as soon and accurately as possible. However, such events impact large volumes of policyholders and their influx of claims can be challenging for insurers to manage. For this reason, state insurance departments usually set special dates for insurance companies to acknowledge a claim has been filed. Typically, companies have 15 days to acknowledge they have received a claim but that is usually extended.

The higher than usual volume of claims might also force insurance adjusters to make rough estimates for claims. If this is the case, the policyholder should be notified and expect a second visit from an adjuster at a later date. Make the second appointment during the first one if you can. In the future, it is possible that the timeline for catastrophe claims may improve. Insurers are filing for approval from regulators to use drones during catastrophes.

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