Believe it or not, many policyholders will help their insurance company withhold money from them that they might have otherwise been paid. Of course, they don’t mean to sabotage their own insurance claim – but the denial will often rest more upon their actions than those of their insurance carrier.
To better understand how insurance companies allow their policyholders to defeat themselves, it is important to understand three basic points:
1. The policyholders must prove they have a covered loss.
2. The insurance company has no duty or obligation to assist the policyholder in their efforts to prove that they have a covered loss.
3. The insurance company has the duty to pay the claim for a covered loss unless they can prove that an exclusion named in the open peril policy applies to the claim. The burden of proof that the exclusion exists rests upon the insurance company.
If you have incurred damage to your home or business, you must present proof of the loss and proof that it is covered under your policy, and you must do it without counting on your insurance company to assist you. It is your duty to prove your claim. If you do, they pay you – unless there is an exclusion in your policy that disallows payment for your particular loss. If there is such an exclusion, the burden of proof is theirs to prove that the condition excluding coverage exists. If they cannot prove this, they must pay you.
Refer to these basic points as you read the following few ways that policyholders I have recently spoken to have assisted their insurance companies with the denial of their claim:
1. “A hailstorm struck my neighborhood recently and everyone within a quarter of a mile of my house had their roofs replaced by their insurance companies, so I filed a claim, too,” said the policyholder to the claims adjuster.
This is a common insurance claim which is just as commonly denied by insurance companies. The policyholder, when reporting a “claim” such as this has no idea whether there is any hail damage to their property and, accordingly, has no proof to provide to the insurance carrier.
Their argument that their claim is based upon the condition of neighboring properties is not only inconsistent with their insurance policy but is just as irrelevant and illogical as if their carrier were to tell them “We are not going to accept your insurance claim for hail damage since no one within a quarter of a mile from you reported damage.” The fact that neighboring structures are damaged does not prove that yours is.
It is possible, by chance, that the adjuster might find hail damage to your property although you did not, but don’t bet on it. The damage he might find could possibly exceed your deductible and you might receive some money for that loss. The future adjustment to your insurance premium, however, might be greater than your settlement if your carrier decides that you are a risk to file a claim against your policy with no actual knowledge of damage. Re-read Basic Point #1, above. Know that you have incurred damage from a storm before you file your claim.
2. “I have water leaking through my ceiling. I filed a claim for damage to my roof,” said the policyholder to the claims adjuster.
In Missouri, it has been an extremely rare event for a hailstone to be large enough to strike roofing material with enough force to create a hole in the roof. A roof leak is rarely associated with damage from hail. More commonly, a roof leak is the result of a maintenance issue related to the deterioration of flashing, aged repairs, or other roofing materials. Before filing a claim for roof damage, you (or a trusted roofing professional at your request) should determine the source of the leak and its cause.
If the cause was sudden and accidental (i.e. wind damage or fallen tree limb, for example), photographs of the damage and cause should be included with the insurance claim you file. If the cause was due to wear and tear of aging materials or other maintenance-related issues, however, your claim will be denied because you failed to prove that you incurred damage from a covered loss. It is better for you (and your future premiums) to know this before you decide to file a claim.
Know where the leak is coming from and what sudden and accidental event caused it. If the leak was caused by a covered peril, prove it to yourself first. When you file your claim, describe the damage and the cause and, when the adjuster comes out to inspect the damage, be prepared with your evidence to prove your covered loss to your insurance company.
3. “We had heavy rain for three days. There is six inches of water flooding my basement. I filed an insurance claim.”
Missouri home insurance policies do not cover “flood” damage. Unless you have an endorsement added to your policy for sump pump failure or backup damage, it is probable that water that enters a home from outside of the home (as opposed to a broken water service line inside the house) is not covered under a home insurance policy.
Before filing a claim, know (and gather physical or photographic evidence) where the water came from. When reporting the claim to the insurance company, don’t describe your damage as “flood” damage when it is water damage caused by a broken line or backed up drain from within the home. If you are counting on the insurance adjuster to investigate and prove your loss for you, it is highly probable that you will be disappointed in his results.
After you have presented proof of your covered loss to your insurance carrier, they should pay you – unless they can prove that your loss is specifically excluded by your policy. To assist them with their proof, the insurance company will sometimes hire people who they have worked with and who they know to be skilled in assisting them with finding such proof (i.e. engineers and consultants). Often, the professionals they hire to assist them will go beyond the scope of PROVING an exclusion and go out in search of one. When this happens, the likelihood exists that the forthcoming denial is based on something less than objective facts.
Since the insurance company hires and pays engineers and consultants to assist them with proving that there is an exclusion to the coverage that removes their obligation to pay you, it is clear to see how a policyholder sabotages his own claim by insisting that the adjuster he disagrees with hire an engineer to inspect the damage – as if the engineer will somehow decide to support the policyholder rather than the insurance company paying him.
Other ways to forfeit your loss is to refuse to provide your insurance carrier with documentation or access to the site they request in a timely manner. Some documents they provide will require responses within certain deadlines which you must meet. Both you and your insurance company have duties to each other under your contract (aka “policy”) that both must meet. Proving your loss is up to you to do. Not your insurance company.
If you are not comfortable preparing your own claim and presenting your proof to your insurance company, a licensed public adjuster can help you. When you present your own claim and are not convinced that the insurance company’s denial or underpayment is fair, have your claim reviewed by your attorney or a licensed public adjuster to determine the next best step.