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What Can I Do If My Insurance Company Won't Pay Me Enough for My Insurance Claim?

When disaster strikes and you need to file an insurance claim, the expectation is that your insurance company will fairly assess your damages and compensate you accordingly. Unfortunately, that’s not always the case. Homeowners, business owners, and policyholders often find themselves in situations where the insurance payout they receive is significantly lower than expected or necessary to cover the full cost of their losses.

So, what can you do if your insurance company isn’t paying you enough for your claim? Here’s a comprehensive guide to help you navigate the process and secure the compensation you’re entitled to.

1. Understand Why Your Claim May Be Underpaid

Before diving into what steps you can take, it’s essential to understand the common reasons why insurance companies underpay claims:

Lowball Estimates

Insurance adjusters, who are often employed by the insurance company, may provide an estimate that minimizes the scope of damage or undervalues repair costs. This practice is unfortunately common, as it saves insurance companies money.

Policy Exclusions or Limitations

In some cases, your policy may have specific exclusions or limitations that affect the amount you're paid. For example, your homeowner’s insurance policy might not cover certain types of water damage or mold, resulting in a reduced payout.

Depreciation Calculations

If you have an Actual Cash Value (ACV) policy, your insurance company might deduct depreciation from your payout, meaning you receive only the current value of damaged items, not their full replacement cost.

Disputes Over Coverage

Sometimes, insurance companies and policyholders don’t agree on the extent of coverage. For instance, your insurer may argue that certain damages were pre-existing or caused by a different event not covered by your policy.

Delays Leading to Further Damage

Insurance companies may intentionally delay processing your claim, resulting in additional damage to your property. In some instances, this delay is used as leverage to pressure you into accepting a lower offer.

2. Review Your Policy in Detail

The first step to address any discrepancy in your claim is to thoroughly review your insurance policy. Understanding the coverage limits, exclusions, and conditions outlined in your policy is crucial in determining if the insurance company's offer aligns with your coverage.

Look for these key elements in your policy:

  • Coverage Limits: Are there any specific limits for certain types of damages?
  • Deductibles: What is your deductible, and how does that affect your final payout?
  • Exclusions: Are there exclusions in your policy that might justify the insurance company’s lower payment?
  • ACV vs. RCV: Does your policy offer Actual Cash Value (ACV) or Replacement Cost Value (RCV)? Knowing this can explain why depreciation was deducted from your claim.

Understanding your policy is the first defense against a lowball offer. If you feel your insurance company is not abiding by the terms of the policy, it’s time to take further action.

3. Document Everything

Thorough documentation is essential when dealing with an underpaid claim. Ensure you have records of all communications with your insurance company, as well as detailed documentation of the damage and repair costs. Here are some steps to take:

  • Take Photos and Videos: Immediately after the incident, document the damage to your property with photos and videos. Be sure to capture close-up shots and wide-angle views.
  • Keep a Detailed Inventory: If personal items are damaged, make a detailed list of each item, including the approximate value and age.
  • Obtain Repair Estimates: Get independent estimates from contractors or repair professionals. This will help you compare the insurance company’s offer to the actual cost of repairs.
  • Save Receipts: If you’ve made any temporary repairs or replaced personal items, keep all receipts. These can be submitted as part of your claim.

4. Request a Re-Evaluation or Second Opinion

If you believe the initial assessment by the insurance adjuster was inaccurate, you have the right to request a re-evaluation. Many insurance companies allow policyholders to seek a second opinion or ask for a reassessment of the claim. Here’s how to approach it:

  • Request a New Adjuster: You can ask your insurance company to send a different adjuster to inspect the damage. Sometimes a second set of eyes can lead to a more accurate evaluation.
  • Hire a Public Adjuster: If you're still not satisfied with the insurance company’s assessment, you might consider hiring a public adjuster. Public adjusters work on your behalf to negotiate with the insurance company and ensure you receive the full compensation you're owed.

Important Note: Public adjusters typically charge a percentage of the settlement amount, so it’s essential to weigh the potential benefits against the cost.

5. Dispute the Claim in Writing

When verbal negotiations don’t work, it’s important to dispute the claim in writing. Draft a formal letter to your insurance company outlining the reasons you believe the claim was underpaid. Include the following in your letter:

  • Detailed Explanation: Provide a clear and concise explanation of why you believe the payment was insufficient. Refer to specific sections of your policy to support your argument.
  • Evidence: Attach copies of photos, repair estimates, receipts, and any other documentation that supports your claim.
  • Request for Re-Evaluation: Formally request that your claim be re-evaluated based on the new evidence.

Sending a written dispute letter signals that you are serious about the issue and gives you a paper trail should the matter escalate further.

6. File a Complaint with Your State’s Department of Insurance

If the insurance company continues to deny or underpay your claim after you’ve disputed it, your next step may be to file a complaint with your state’s Department of Insurance. Each state has its own regulatory agency that oversees insurance companies and ensures they comply with the law.

  • How to File a Complaint: Visit your state’s Department of Insurance website to find information on how to file a formal complaint. Typically, you will need to submit a detailed account of the issue, including copies of correspondence with your insurance company.
  • Investigation: Once your complaint is filed, the Department of Insurance will investigate the matter. They may intervene on your behalf or take action against the insurance company if they find evidence of wrongdoing.

Filing a complaint can be an effective way to put additional pressure on your insurer, especially if they’ve engaged in unfair claims practices.

7. Consider Mediation or Appraisal

In some cases, a third-party mediator or appraiser may be able to help resolve disputes over the value of your insurance claim. Many insurance policies include an appraisal clause, which allows both you and the insurance company to hire independent appraisers to assess the damage. The appraisers then agree on a neutral third party to make a final decision.

Mediation

Mediation involves both parties (you and the insurance company) meeting with a neutral mediator who facilitates negotiations. While the mediator doesn’t make decisions, they can help both sides reach a fair settlement.

Appraisal

In the appraisal process, both parties select an independent appraiser, and those appraisers agree on an umpire to settle the claim. The decision reached by the umpire is typically binding. This is a less formal and often quicker alternative to litigation.

8. Seek Legal Help

If all else fails, it may be time to consult with an attorney who specializes in insurance disputes. A qualified attorney can review your case, assess the evidence, and determine whether your insurance company is acting in bad faith.

Bad Faith Insurance Practices

Insurance companies are legally required to act in good faith and deal fairly with policyholders. When an insurance company knowingly underpays or wrongfully denies a claim, it may be guilty of acting in bad faith. Examples of bad faith practices include:

  • Unreasonable delays in processing or paying out claims
  • Failing to investigate a claim thoroughly
  • Misrepresenting policy terms to avoid payment
  • Lowballing offers to save money

If your insurance company is found to have acted in bad faith, you may be entitled to additional compensation beyond your initial claim, including damages for emotional distress or punitive damages.

Legal Representation on a Contingency Basis

The Voss Law Firm, P.C. represents policyholders on a contingency fee basis, meaning there are no upfront costs, and you only pay if the firm successfully recovers compensation for you. This structure ensures that legal representation is accessible, even if you're facing financial difficulties after your loss.

Conclusion: Don’t Settle for Less

If your insurance company isn’t paying you enough for your claim, don’t give up. By understanding your rights, documenting everything thoroughly, disputing the claim, and seeking professional help when necessary, you can improve your chances of receiving the full compensation you deserve.

For policyholders who feel overwhelmed by the claims process, The Voss Law Firm, P.C. is here to help. Our experienced attorneys specialize in holding insurance companies accountable and ensuring you receive fair compensation. Contact us today for a free consultation and let us handle the work so you can focus on recovering from your loss.


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The Voss Law Firm, P.C. represents clients on a local, national and international basis. We proudly serve companies and individuals along the Gulf Coast and around the globe on a contingency fee basis. Our law firm collects nothing unless we recover on our client's behalf.

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