Getting Paid By Home Insurance Companies
Partial Payments – Advances. Partial payments and advances are not an obligation of you home insurance company. The practice of advance payment is an industry standard, but is not necessarily a service your insurance company must provide.
Most insurance companies will advance payment for living expenses and emergency repairs before you are able to obtain receipts. Remember that any advance payment or partial payment will be deducted form your final settlement.
Your Mortgage Company Is On The Check
Most homeowners have a mortgage on their home. All of the standard homeowner’s policies contain a mortgage clause that requires the insurance company to name the mortgage holder on payment drafts. The reason for the clause is simply to protect the mortgagee’s interest in the property.
An individual or firm holding a mortgage on a piece of property has a vested interested in seeing that the property is secure and kept in god repair.
When a mortgage company is named as a payee on a settlement draft or check, problems can arise because the mortgage company can choose to hold on to all of the funds until the repairs are completed. This can be hard on you, especially if you are dealing with a contractor who is not financially solvent enough to completely the work before getting paid.
Also, it is essential that you keep your mortgage payments up to date. If you don’t, it may give the mortgage company justification either to call your loan in or to take the proceeds of the settlement and apply them toward your mortgage. If the amount of your rebuilding settlement is greater than the amount of your mortgage, the mortgage company should release the difference to you. The mortgage company generally has no legal basis for holding more than you owe.
Keep in mind that if you have hired a top quality restoration contractor to do you loss rebuild or repair, he/she will generally completed the work before expecting payment form the insurance company for their services. This take the financially load off of you, and you can most likely rest assured that you are dealing with a solvent company who can perform your work request immediately.
If you are dealing with other types of repair persons, the mortgage company may only advance approximately 10% of the monies held to commence the work. The rest of the payments throughout the job will be distributed in progress payments as work is completed. Usually, the mortgage company will require inspections to be performed to verify that the work has indeed been done.
Some states have laws that require mortgage companies to deposit insurance settlements into interest-bearing accounts. But in states that lack such a law, contact your mortgage company and suggest alternatives to release the money that may be withheld. If necessary, you can contact an attorney for assistance.
Taxes and The Internal Revenue Service (IRS)
An insurance claim filed by you may be something you should consider on your tax return. As a taxpayer, you may be allowed to “write off” certain losses. These losses might include those not covered by insurance, or portion of losses that are not covered.
The law generally does not allow deductions for losses that would be covered by insurance but were not claimed.
If the insurance company does not pay the full value of the loss, you may be able to deduct the difference between what you received from the insurance company and the value of the loss (as a tax write off). In many cases, the amount you paid for your insurance deduction is a tax deduction as well.
You should consult your accountant or tax preparer for information and advice on deducting insurance losses.
Compare Home Insurance Quotes
After a home insurance claim settlement, your home insurance rates may increase depending on the circumstances of your claim. In some cases, this may be the right time to research and compare home insurance quotes and make the switch to cheaper, more affordable home insurance coverage. NationalLenderList.com can show you some of the home insurance companies available in your area and provide rate quotes to help you decide which home insurance company best fits your needs. Additionally, compare life insurance quotes and car insurance rates to buy multiple policies from the same insurance company to get discounts. We offer consumers the ability to compare whole and term life insurance quotes so you can save money when you buy an insurance policy in the future.
Finding and Selecting Your Appraiser
When you prepare to select an appraiser for your property damage dispute with the insurance company, remember that the word “appraiser” can mean a number of things. Generally, we refer to an appraiser as a kindly gent peering through an eyepiece to judge the value of your diamond-studded ring.
If you browse through the yellow pages of your telephone directory you’ll be amazed at how many appraisers offer this type of service. However, you are not looking for a jewelry appraiser if you need someone competent in the field of property damage claims.
The appraisal process requires an individual with skill and knowledge in the construction field, the appraiser should not just evaluate damage but have a thorough knowledge of the complete construction/rebuilding process. The following are some basic concepts the appraiser should understand and have experience with to provide an accurate assessment of the situation and appraise accordingly:
- All facets of the construction trade
- Knowledge of engineering requirements
- Knowledge of material pricing
- Knowledge of material sources
- The labor and time elements related to repairs and reconstruction
- Specialty conditions and circumstances
The individual you choose as your appraiser will be required to represent you in the appraisal process through documentation and oral argument in front of the umpire assigned to hear the dispute.
Your appraiser must be:
- Articulate
- Persuasive (he or she will be conducting an argument on your behalf and in your best interest)
- Believable (he or she will have to convince the umpire that your position is right and the insurance company is wrong)
- A disinterested party (he or she should not have a financial connection to you, with the exception of the fee for his/her services. This also means that the appraisers cannot work for the company that will be doing the work on the damaged property or s in any way connected to the supplier of materials.)
If you have a problem finding a qualified property damage appraiser, you can hire an appraiser from the following fields for the purpose of representing you at the appraisal process:
- Attorneys (with knowledge of the construction trade)
- Architects
- Engineers
- A good restoration contractor who does not have a financial interest in the outcome of the appraisal.
- Remember again, any appraiser that you hire must not have a financial interest in the outcome of the appraisal process, with the exception of their normal fee for their services as an appraiser.
If you have a problem locating an appraiser, consider contracting a qualified restoration contractor, since they work with insurance companies on a daily basis. You may also, in addition to checking your local yellow pages, consider library sources, real estate brokers or mortgage offices. To determine a state approved appraiser, you can contact your state’s Office of the Insurance Commissioner for assistance.
One last thing to consider when interviewing your prospective choice for appraiser is that you ascertain their “track record” and experience in their dealings with insurance carriers. Ask if they have ever been part of an appraisal process with your insurance carrier. Also determine what their history ahs been as far as the position they have taken in the past; for example, have they worked on behalf of the insurance company or on behalf of the homeowner claimant?
Can I Sue For “Bad Faith?”
Your insurance company is said to have a fiduciary relationship with its customers. This means the protection of the policyholder’s property is held in trust by the insurance company, and therefore, the company owes the policyholder fair treatment. The insurance company is required to deal with you fairly and cannot take advantage of your lack of knowledge or deprive you of claim payments you are entitle to as an insured.
When an insurance company violates the fiduciary relationship with its customer and neglects to provide the protection called for by the policy, the company may be seen as acting in “bad faith.”
In order for bad faith to exist, there usually must be conscious wrongdoing on the part of the insurance company and not merely an honest mistake.
In order to determine if your claim warrants a bad faith action you usually have to meet a number of requirements. It should be noted that bad faith action are unique to their own circumstances and evidence, and the following list should not be an indication or suggestion that this is all you are required to prove in order to file a bad faith claim, or to be successful in the outcome. Items to consider include, but are not limited to:
- Determining coverage at the time of loss and were you covered by the applicable policy?
- Does your insurance contract subject the insured to damages over and above whatever may be due under the contract?
- Has the insurance company failed to perform its implied duties under the contract?
- Has the insurance company committed fraud, negligent misrepresentation, intentional infliction of emotional distress, etc.?
- Are punitive damages applicable?
- Has the insurance company withheld benefits, denied benefits due, paid less than due, or unreasonably delayed payment?
Because the insurance company’s officers, agents and representatives are not a party to the insurance contract, you usually cannot sue them individually. You are not suing your insurance company directly on the basis of the conduct or “unreasonable practices” of the company’s representatives.
The following conduct by an insurance company has been held admissible to show it acted “unreasonably”:
- Failure to investigate claim thoroughly
- Failure to evaluate claim objectively
- Unduly restrictive interpretation of claim form
- Using improper standards to deny claim
- Dilatory claims handling
- Deceptive practices to avoid payment of claim
- Abusive or coercive practices to avoid payment of claim
- Disregard for the insured’s rights
- Unreasonably low settlement offers
- Unreasonable litigation or litigation tactics to avoid payment of claim
In most jurisdictions, if you sign a release with the insurance company you may waive your rights to pursue an action of bad faith against your insurance company.
Please note that in order to undertake a lawsuit for bad faith; you should consult legal counsel because of the complexities and legal theories that are required to bring such an action.
Legal Counsel
The use of lawyers often is an economic decision. If you have followed the recommendations contained in this book, you will have laid the groundwork in an organized fashion for the lawyer to take over. This should provide you with a great deal of savings of both money and time.
Lawsuits are an action of last resort. You can win, or at least get the amount you think you’re owed, but it should take years, especially since insurers may certainly appeal any verdicts against them. It doesn’t make sense to file suit if you’re going to end up having a lawyer more than the amount t of your claim.
In some limited cases, there may be provision in your insurance policy allowing the prevailing party to recover their attorney fees.
Homeowner Insurance Quotes
National Lender List provides homeowners with access to some of the best nationwide home insurance companies and can help owners get the cheapest home insurance quotes and make the switch to a better insurer. NationalLenderList.com has also partnered with other insurance quote websites to offer cheap life insurance quotes, cheap car insurance, term life insurance, and the best life insurance rates available in the U.S.
Denied Home Insurance Claim, Now What?
If your dissatisfaction stems form the conduct or non-responsiveness of the adjuster assigned to your claim, be sure to write a letter to your adjuster. A letter can be directed to specific individuals who are influencing your claim.
Some state insurance departments offer mediation services. In addition, most policies allow for an independent appraisal or arbitration process to resolve disputes over money. The decision of the appraiser or the arbitrator is often binding. The decision, however, doesn’t always close the door to mediation or litigation on other issues, such as “bad faith.” It is an important point to continually maintain your claim file. This file may prove invaluable if your claim is contested or if you bring forth an action of bad faith.
Contacting the Insurance Commissioner
Each state has an Insurance Commissioner. Most commissioners are appointed by the Governor of the state, although some are elected officials. The Insurance Commissioner’s office is given the task of monitoring the activities of insurance companies, assuring proper compliance with state laws regulating insurance companies, and evaluation whether the insurance companies are solvent.
If you have any kind of question or problem regarding insurance in general, or a claim in particular, the Insurance Commissioner’s office is available to offer you assistance. If you have a valid complaint against your insurance company, or you feel you are not being treated fairly, the Insurance Commissioner’s office will investigate the issue. If there is a problem with your claim, the Insurance Commissioner’s office can be a powerful force. Contract your own individual state’s Department of Insurance and request to speak to someone on the staff of the Insurance Commissioner.
Alternative Remedies – Appraisal, Arbitration, Lawsuit
Perhaps the most neglected section of any homeowner policy is the “Appraisal Clause.” It can be found under the “Conditions” portion of any property insurance policy. It is such an important section of the policy for you, the policyholder, that it bears close scrutiny.
The appraisal process is usually the most economical procedure to take rather than to immediately seek legal counsel. There is no guarantee that the appraisal will allow you to settle with the insurance company for the amount you feel is fair and reasonable for your damages. But, there is a good chance that you will at least settle far better than you would have if the appraisal process was not initiated at all.
If your policy contains an appraisal process clause, your insurance company might try to force you in to the appraisal process. They may possibly send you an “official looking” letter saying you have 20 days or less to retain an appraiser. Do not be intimidated by this kind of pressure. A letter notifying you of your right to the appraisal process is not necessarily a demand by the insurance company to engage in one. You have the option to initiate the appraisal process but so does your carrier. The carrier will rarely initiate the appraisal process, but if they do, take not of the time for you to respond.
If you decide to enter the appraisal process and are dissatisfied with the outcome of the appraisal decision, you can sue your insurance company. Keep in mind if you elect to sue, that the absence of evidence of wrong-doing on the insurance company’s representative part during the appraisal process, will be vigorously defended by your insurance company and can be very expensive.
Home Insurance Claim Arbitration
If there is not a mandatory arbitration clause in your policy, and your disagreement is based on the value of the claim, you can request arbitration with your insurance company. If arbitration is agreed upon by both parties and your policy has an arbitration provision, then you both must agree as to whether the decision of the arbitrator will be binding or non-binding. If the parties decide that the arbitration ill be binding, then the decision of the arbitrator will be final. If, however, the parties decide that the decision of the arbitrator will be non-binding, and you or your carrier receives an unsatisfactory result, you can elect to file a formal lawsuit and proceed to trial. Arbitration rules vary from state to state so it is a good idea to consult legal counsel when selecting this course of action.
After you file a lawsuit, a judge will review the case and determine the value of the claim. Next, based on the amount o the damages, the judge can determine whether the case may be arbitrated or tired in a court of law.
If the judge sends the case to arbitration, the parties must agree as to whether the decision of the arbitrator will be binding or non-binding. (If an agreement cannot be reached, the decision will be non-binding). As in a non-judicial arbitration, a binding decision is final. If, however, the decision of the arbitrator will be non-binding, and you receive an unsatisfactory result, you can then request a “Trial de Novo,” and the case will be put back into the trial court and either settled or tried. Arbitration is an alternative solution to a potentially costly trial.
Lawsuits are the absolute last resort if you have a dispute with your insurance company. Lawsuits are very expensive and demand a high level of commitment of your time and resources. They are often high-risk contests that usually don’t compensate for the economic loss you will have suffered as a result of the money you will have invested in bringing the lawsuit. You may be justified in filing a formal lawsuit if you have suffered a major loss and your insurance company is continuing to deny your claim.
A final note: Your insurance company is obligated to notify you (after you have filed a claim) of an impending statue of limitations deadline. Generally, you have within one year form the date of loss to file a formal lawsuit, However, you should consult legal counsel or check with your state’s Insurance Commissioner’s office to determine the applicable statue of limitations, to ensure you are filing your lawsuit in a timely manner!
Homeowner Insurance Quotes
If you're unhappy with your home insurance company, feel they do not have your best interests at heart, or think you may be overpaying for the coverage and service you are receiving, homeowners can always find and compare home insurance quotes online. NationalLenderList.com provides homeowners with access to many of the top best home insurance companies in the country and can help owners get cheap home insurance quotes and make the switch to a better insurer.
Read more about "Finding and Selecting Your Appraiser" for the litigation of your home insurance claim.