Author Archives: James H. Bushart

How NOT to Insure an Older Commercial Building

July 27, 2021 By in Property Insurance Tags: , , , 3 Comments

commercial building

It is likely that your older building complied with all applicable building codes when it was originally constructed. However, unless it has undergone major renovations or upgrades since then, it probably does not meet current building standards — and is generally not required to until significant restoration or renovation work becomes necessary.
What many commercial property owners do not realize is that standard property insurance policies often contain an exclusion that denies coverage for the additional costs of complying with current building codes and local ordinances after a loss.
For example, if lightning strikes the building and damages only a small portion of the original electrical system, local building codes may require a complete rewiring of the entire building to meet today’s standards. In that case, the insurance company would typically pay only for repairing the damaged section and leave you responsible for the much more expensive code-upgrade work.
If you own a commercial building that is twenty years old or older, I strongly recommend speaking with your insurance agent or broker. They can determine whether your policy already includes — or whether you should add — an endorsement for Ordinance or Law Coverage (also known as code upgrade coverage). This protection can help shield you from significant out-of-pocket expenses following a covered loss.

Is Your Property Fully Insured?

July 14, 2021 By in Property Insurance Tags: , , Leave a comment

 

 

After considering the adversarial posture of an insurance company toward its policyholder in the event of a claim and assuming the best – that you would be successful in recovering the most that your policy provides to restore your property after a catastrophic loss – did you buy enough insurance to actually restore your property?

Some people will negotiate a terrific deal when purchasing a commercial building or residential dwelling and then will insure that building for the amount of money they paid for it.  The mortgage lender is certainly happy with that amount of insurance for it fully protects their financial investment, but is the market value of a structure sufficient to rebuild it if it were destroyed?  Most likely, it would be significantly less, and it is probably not your plan after a major loss to simply pay off your loan, remove the rubble at your own expense, and live or conduct business on an empty lot.

Even before the current exponential increase in costs for building materials, the market value of a structure did not reflect the cost of replacing all or most of it which, in the event of a major fire or storm, would be the purpose of an insurance policy.

A general contractor or builder in your immediate area will be able to tell you what an average cost per square foot would be to replace all or most of your building today if it were significantly damaged.  Take that cost and multiply it by the square footage of the building you are insuring and then add a few dollars for next year’s inflation.  This will tell you whether or not your home or business structure is insured for a sufficient amount of money.

Until such time the costs of building materials begin to stabilize, this is probably something that you want to do prior to your renewal each year.

 

How to Help Your Insurance Company Deny Your Claim

July 13, 2021 By in Property Insurance Tags: , , 1 Comment
tombstone in graveyard depicting a dead insurance claim

Killed by the policyholder.

     

Believe it or not, many policyholders unintentionally help their insurance company deny their claim and withhold money they might otherwise receive. Of course, they don’t mean to sabotage their insurance claim — but the denial often stems more from the policyholder’s own actions than from anything the insurance carrier does. To understand how insurance companies let policyholders defeat themselves, it is essential to remember three key points about insurance claim denial:

  1. The policyholder must prove that they have a covered loss.
  2. The insurance company has no duty or obligation to assist the policyholder in proving 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. The burden of proof for any exclusion rests squarely on the insurance company.

If you have damage to your home or business, you must present proof of the loss and proof that it is covered under your policy — without expecting your insurance company to help you. You must prove your claim. If you do, they pay you — unless they can prove an exclusion applies. If they cannot prove the exclusion, they must pay.Keep these three points in mind as you read the following real-world examples of how policyholders I have recently spoken with helped their insurance companies deny their claim:

  1. “A hailstorm struck my neighborhood recently, and everyone within a quarter mile of my house had their roofs replaced by their insurance companies, so I filed a claim too,” the policyholder told the claims adjuster.

This is one of the most common ways policyholders trigger an insurance claim denial. When reporting a claim like this, the policyholder has no personal knowledge of hail damage to their own property and therefore no proof to provide the insurance carrier. Arguing that “everyone else got paid” is both inconsistent with the insurance policy and completely irrelevant. It would be just as illogical for the carrier to say, “We’re denying your hail claim because no one else within a quarter mile reported damage.” Neighboring damage does not prove your damage.The adjuster might happen to find hail damage during inspection, but don’t count on it. Even if you receive a small settlement above your deductible, the long-term increase in your insurance premium could easily exceed the payout — especially if the carrier now views you as someone who files claims without proof of damage. Re-read point #1 above: Know you have a covered loss before you file.

  1. “I have water leaking through my ceiling. I filed a claim for damage to my roof,” the policyholder told the claims adjuster.

In most states, including Missouri, it is rare for hailstones to strike roofing material hard enough to create an actual hole. Roof leaks are far more often the result of maintenance issues — deteriorated flashing, aged repairs, or worn-out materials. Before filing any roof damage claim, you (or a trusted roofing professional) must determine the exact source and cause of the leak. If the cause was sudden and accidental (for example, wind damage or a fallen tree limb), include clear photographs of both the damage and the cause with your claim. If the leak resulted from normal wear and tear or lack of maintenance, your claim will almost certainly be denied because you failed to prove a covered loss. Knowing this before you file protects both your claim and your future premiums.Always prove to yourself first that a covered peril caused the damage. When you file, clearly describe the damage and the sudden, accidental cause. Then be ready with evidence when the adjuster arrives.

  1. “We had heavy rain for three days. There are six inches of water flooding my basement. I filed an insurance claim.”

Standard homeowners insurance policies do not cover flood damage. Unless you have a specific endorsement for sump pump failure or water backup, water entering from outside the home is typically excluded. Before filing, determine exactly where the water came from and gather physical or photographic evidence. When reporting the claim, do not describe the damage as “flood” damage if it was actually caused by a broken pipe or backed-up drain inside the home.

Relying on the adjuster to investigate and prove your loss for you is a fast track to insurance claim denial.Once you have properly presented proof of a covered loss, the insurance company should pay — unless they can prove an exclusion applies. To strengthen their case, carriers often hire engineers and consultants they have long-standing relationships with.
These professionals are paid to find exclusions, not to advocate for the policyholder.That is why it is almost always a mistake for a policyholder to demand that the insurance company “hire an engineer” when they disagree with the adjuster. The engineer works for the company paying the bill — not for you.Another common way to help your insurance company deny your claim is to delay or refuse to provide requested documents or site access.
Insurance policies impose duties on both parties. Missing deadlines for documents or inspections can give the carrier legitimate grounds for denial.If you feel uncomfortable preparing and presenting your claim with the necessary proof, hire a licensed public adjuster to represent you.
If you receive a denial or lowball settlement and believe it is unfair, have the entire file reviewed by an attorney or licensed public adjuster before deciding on the next step.Protecting your insurance claim starts and ends with you.
Prove your covered loss clearly and completely — or risk helping your insurance company deny your claim.
James H. Bushart, Licensed Missouri Public Adjuster
MO License #8207067 | SCLA | NAPIA
314-803-2167 | missouripublicadjuster.org

Engineer Speak – “Cosmetic” Versus “Functional” Damage

July 7, 2021 By in Property Insurance Tags: , , Leave a comment

Once there was a maintenance man who worked in a famous art museum and was directed by his supervisor to touch up the white paint on the wall of a certain gallery within the museum.  As he was ascending his ladder he accidentally tipped over his gallon of white paint and it splashed across the surface of a 550-year-old painting from a world-famous artist that hung in the gallery.

Of course, the painting was insured and the curator immediately filed a claim.  The insurance adjuster took a few photos and shared them with his boss who said “We need to send out an engineer.”  

The engineer arrived to examine the painting and noted that the framed canvas was designed and intended to hold paint of various colors.  Since the canvas and frame were still intact, he recorded that the painting was still “functional”.  The painted surface had white paint splashed across the smiling face of a woman named “Lisa” or something, but he reported the damage was “cosmetic” in that it did not interfere with the “function” of the canvas to hold paint.  It was, after all, covered with paint … and the gallery was filled with various paintings with random splashes and colors.  He concluded that there was no “functional” damage and the insurance company denied the claim.

This story is fictional, of course … but the actions described represent those that are quite common with home and business property insurance claims.

Let’s look at the shingles on your roof, for example.  The manufacturer of your shingles produces them in a wide variety of colors, shapes, and styles.  When you selected them (or selected the house that already had them), you noted their color and design in context with the features of the rest of the structure, didn’t you?  Of course, their designed purpose is to protect the roof from wear and water intrusion but they also were carefully and creatively designed to enhance the beauty of the home.

When a sudden storm pounds them with hail, along with the metal appurtenances, gutters, downspouts, and other surrounding materials, they will often be damaged.  When they are damaged, you might contact your insurance carrier to file a claim for direct physical damage or loss to your roofing materials.  The insurance adjuster will arrive, take a few photographs, and return to speak to his boss.  When the boss does not want to pay you for your damage … he will send an engineer.

The engineer will often look at your shingles and surrounding metals for gaping holes.  Finding none, he declares that the shingles and metals are still shedding water as they were designed to do, and the damage to them is not “functional” but merely “cosmetic”.  Based on this report, the manager will deny the claim – for this is the very reason the engineer was hired.

Insurers have been taken to court over exactly this conduct. In North Shore Co-Owners’ Association v. Nationwide Mutual Insurance Co., No. 1:18-cv-03632 (S.D. Ind. 2019), a federal court refused to dismiss a policyholder’s bad-faith claim where the insurer’s engineer defined hail “damage” to include only “functional” damage — even though the policy covered cosmetic shingle damage from hail. That case applied Indiana law, but the underlying problem is one Missouri policyholders see constantly: an engineer substituting his own definition of “damage” for the definition in your policy.

When you believe that your insurance carrier is trying harder to deny your claim than pay your claim, you may be the victim of improper claim handling, bad faith, or vexatious actions on the part of your carrier.  When this happens, seek the advice of your attorney or a licensed public adjuster.

What Is Insurance Fraud in Missouri?

July 7, 2021 By in General Home Issues, Property Insurance Tags: , Leave a comment

What constitutes insurance fraud in Missouri?

Insurance fraud is an affirmative defense used by insurance companies to deny claims.  The burden of proving fraud to deny an insurance claim is not as stringent as it is to prove insurance fraud for a criminal conviction.  This post is intended only to generally inform the reader of the statute that governs the Class E and Class D felonies of insurance fraud in the State of Missouri and describe how insurance companies use this defense to deny insurance claims.  It is not to be construed as legal advice.

According to the Missouri Revised Statutes:

375.991.  1.  As used in sections 375.991 to 375.994, the term “statement” means any communication, notice statement, proof of loss, bill of lading, receipt for payment, invoice, account, an estimate of damages, bills for services, diagnosis, prescription, hospital or doctor records, x-rays, test results or other evidence of loss, injury or expense.

2.  For the purposes of sections 375.991 to 375.994, a person commits a “fraudulent insurance act” if such person knowingly presents, causes to be presented, or prepares with knowledge or belief that it will be presented, to or by an insurer, purported insurer, broker, or any agent thereof, any oral or written statement including computer-generated documents as part of, or in support of, an application for the issuance of, or the rating of, an insurance policy for commercial or personal insurance, or a claim for payment or other benefits pursuant to an insurance policy for commercial or personal insurance, which such person knows to contain materially false information concerning any fact material thereto or if such person conceals, for the purpose of misleading another, information concerning any fact material thereto.

6. A fraudulent insurance act for a first offense is a class E felony. Any person who is found guilty of a fraudulent insurance act who has previously been found guilty of a fraudulent insurance act shall be guilty of a class D felony.

7. Any person who pleads guilty or is found guilty of a fraudulent insurance act shall be ordered by the court to make restitution to any person or insurer for any financial loss sustained as a result of such violation. The court shall determine the extent and method of restitution.

8. Nothing in this section shall limit the power of the state to punish any person for any conduct that constitutes a crime by any other state statute.

Be reminded that acts of fraud, both civil and criminal, include the application for the insurance policy as well as the filing of an insurance claim.  

When the policyholder makes false statements or conceals material facts or evidence when applying for insurance coverage or during the course of a claims investigation with the intent to deceive the insurance carrier, it is not necessary for the insurer to actually pay the claim for the act of fraud to be committed.  Courts have held that fraud attempted, even when the policyholder argues that he was merely using negotiation tactics, is still fraud.

As for the claim, fraud in any aspect of a claim is a bar to coverage for the entire claim.  This means if a policyholder made a material misrepresentation about his loss from fire of personal property but made no misrepresentation about damage to his house, the claim can be denied for BOTH the personal property and the house.

If you are handling your claim on your own and without the assistance of an attorney or public adjuster, it is important to be aware and understand that your words matter.  Since misrepresentation and fraud are defenses that allow the insurance carrier to deny a claim, there is a significant financial incentive for the adjuster conducting the investigation to discover or interpret certain acts and information, accordingly.  Be truthful, precise, and present to the insurance company only what you know to be true.

The Insurance Company’s Adjuster and Your Claim

July 4, 2021 By in Property Insurance Tags: , , , 2 Comments

The insurance company adjuster and your claim

Successfully navigating through the insurance claims process can be challenging for a home or business owner who has suffered loss or damage to their property. Knowing the process and its boundaries and setting reasonable expectations will play a key role in achieving success with the minimum amount of frustration. Knowing what to expect (and what not to expect) from your insurance company’s adjuster is important.

Once an insurance carrier has been notified that a loss has occurred to the property that it insures, the insurer will assign one of its employees or an independent adjuster to investigate and gather information about the claim.

Many policyholders begin this process under the mistaken impression that the adjuster’s job is to assist the policyholder with their claim, but quickly learn that this is not true. It is the burden of the policyholder (not the insurance company’s adjuster) to prove that his loss was caused by a covered peril. The adjuster assigned to the claim is tasked to protect the rights and interests of the insurance carrier and assist the carrier in obtaining and presenting evidence of a policy’s exclusion when it exists.

While it is the burden of the policyholder to prove his loss was caused by a covered peril, it is the burden of the insurance carrier to prove that coverage is excluded under the policy. Presumably, both sides are prepared or preparing to meet their burdens of proof. How does the insurance company’s adjuster go about doing this for his employer?

First, he confirms that the damaged property is the property described in the policy and was at the location described in the policy. If you are claiming an item that you did not insure, or if the insured item was not on the insured property when it was damaged, you might not have a valid claim.

Next, he confirms that the loss occurred during the time period when the policy was in effect. If your roof was damaged by hail and the last hailstorm in your area occurred two months prior to the beginning of your coverage, his job is to discover and record that fact.

He will then determine whether the loss was caused by a peril covered by your policy. There are many causes for damage that are specifically excluded from an insurance policy.

The adjuster will then determine the extent of the ownership interest of the policyholder in the insured property and the extent of the ownership interest of others in the insured property. If the policyholder shares ownership of the property with others, how much of the damage is his loss and how much might be shared with others?

He will investigate to confirm that the policyholder did not commit fraud or material misrepresentation to procure the insurance policy. If the policyholder withheld material information in his application used to determine risk, for example, coverage under the policy may be rescinded.

The adjuster will confirm whether the premises were occupied as permitted or required by the policy. Certain policies negate coverage for loss when the property had been vacant for more than 60 days during the term of the policy.

He will also confirm that, at the time of the loss, there were no conditions that would cause suspension of the coverage.

This is the investigation that the adjuster conducts at the same time he is taking his measurements and photographs of the damage to determine the value of the loss, should it be paid. These are the purposes behind his questions as he conducts his investigation to first determine IF the insurance company will pay before determining how much money the carrier might offer.

It is imperative and required by the insurance contract that the policyholder fully cooperate with this investigation and be precise, accurate, and truthful when responding to these inquiries. Fraud and/or misrepresentation of the smallest degree can result in complete denial of the entire claim.

When the adjuster believes that there is a possibility of the existence of an exclusion to the peril that you have reported a loss from, he is likely to seek the assistance of someone the carrier can use as an expert (should you sue) to support their use of that exclusion. Therefore, the carrier will hire an engineer or other expert to look at the damage. Policyholders who disagree with the carrier’s decision regarding coverage of their claim and do not understand how and why insurance companies use experts will sometimes demand on their own that the insurer pays for an engineer to evaluate the damage that they believe should be paid. In doing so, they are unwittingly providing the carrier with ammunition to use against them instead of meeting their own burden to prove their loss – since the insurance company’s engineer is not going to be paid by the carrier to assist the policyholder to defend against them.

Understand the process, be fully prepared to prove that your loss or damage was caused by a covered peril when you file your claim and seek the advice of an attorney or public adjuster if you are not fully confident in handling the claim on your own or at the first sign of trouble with your insurance carrier.

 

What Must I Prove When Filing an Insurance Claim?

July 2, 2021 By in Property Insurance Tags: , , , , 2 Comments

 

Burden of proof with insurance claim

Filing an insurance claim is often more complicated than it first appears. Someone who has never filed before may assume the process is simple: notify the carrier of the loss and wait to be paid. What many don’t realize is that the responsibility to show that covered property was damaged by a covered cause of loss falls on the policyholder. A common and costly misunderstanding is the belief that the carrier owes payment unless it can prove otherwise. That’s backwards, and it usually leads to frustration.

Before deciding to file, a policyholder should understand two points about how property claims generally work:

  1. The policyholder is responsible for showing that a covered cause of loss damaged covered property.
  2. The insurer is responsible for showing that an excluded cause of loss produced the damage, if the insurer intends to deny on that basis.

Too often, a policyholder notices a symptom — a ceiling leak, for example — and files a roof claim without knowing what actually caused the leak or whether that cause is covered. They ask the carrier to send an adjuster out to “pay the claim,” having done nothing to establish coverage.

The company’s adjuster works for the insurance company and protects its interests. That adjuster has no duty to prove a covered cause of loss caused your damage. The adjuster’s job is to gather information and evidence — and, where an exclusion may apply, to build the support the company would need to deny or limit the claim. When the adjuster is unsure about what he’s seeing or whether an exclusion applies, he may bring in a third party such as an engineer, architect, or consultant to assist.

By the time that investigation is done, the carrier is prepared to argue against coverage — while the typical policyholder, who never built a case that a covered cause of loss damaged covered property, is not.

So the prudent policyholder investigates the claim before inviting the carrier to investigate it. Here’s what I generally recommend:

  1. Know what is damaged and what caused it — as best you can. If you can’t determine this yourself, get the opinion of a trusted professional who is skilled with the damaged material. If your roof is leaking, have a roofer identify the source of the leak and what caused it.
  2. Collect the evidence. Preserve physical and photographic proof of the damage and its cause, and obtain a written repair estimate from a trusted contractor to restore the property to its pre-loss condition. (Avoid letting your contractor negotiate directly with the carrier. A contractor typically doesn’t know your coverage and has a financial interest in the work — a combination the adjuster can exploit.)
  3. Determine whether the damage is covered. Read your policy and talk with your agent. If a question turns on what your policy language legally means, that’s a question for an attorney. If you want help organizing your claim and presenting your damages, a licensed public adjuster can represent you in that process.
  4. Give your evidence to the carrier when you file — or when the adjuster inspects, if that’s more convenient. If you aren’t comfortable handling this yourself, a public adjuster can manage it for you.
  5. If the carrier won’t cooperate after you’ve documented your loss, get help. A public adjuster can represent you on the claim itself; an attorney can advise you on your legal rights and options.

The goal is simple: don’t hand your claim to the insurance company before you’ve done the work to support it. Prepared policyholders get better outcomes.

James H. Bushart is a licensed Missouri public adjuster. This article is general information about the claims process, not legal advice.

Do You Become the Enemy When You File an Insurance Claim?

June 19, 2021 By in Home Owner Insurance Issues Tags: , , , 1 Comment

Enemy for filing a claim

   “I have paid my premiums on time for twenty years and have never filed a claim.  Now, it is difficult for me to tell who has caused me more damage — the storm or my insurance carrier.”

     The above exclamation, or words like it, is something that I hear daily from Missourians who have had the misfortune of needing to file an insurance claim for damage to their homes and businesses.  Do you really become “the enemy” of your insurance carrier when you file a claim?  Do they really consider you more as an adversary than a customer?  

     I received an email today from an attorney representing an insurance carrier from out of state and who sells insurance policies in Missouri who provided a clear and convincing answer to those questions.

     My client, a commercial business, had incurred extensive and obvious hail damage to multiple buildings and filed an insurance claim.  Their insurance company hired an independent adjustment firm to inspect the damage who reported their observations to the carrier.  The carrier, after receiving their report and photographs, decided to hire an engineer who regularly assists insurance carriers in denying coverage for hail damage to properties in Missouri.

     With the hail damage being as obvious as it was, there was no legitimate reason to have an engineer look at the same dents, gouges, and tears that their independent adjuster had just seen and photographed.  I suspected that the independent adjuster had recommended that the claim be paid against the carrier’s wishes, and I requested a copy of his report.  Insurance companies will share their reports when their report supports a claim denial.  For some reason, the carrier did not want to share this one and I was suspicious of their intention.

     When I submitted a formal written request for a copy of the report from their independent adjuster that I believed supported my client’s claim for damages, I received a letter from the carrier’s attorney in response that confirmed my suspicions.  In part, it read as follows:

     “Under Missouri law, the relationship between an insured and the insurer with regard to first-party claims becomes adversarial when a claim is made on the policy.  Therefore, the insurer is entitled to assert work product privileges to prevent access to materials found in the claim or investigative file.”

     Because my client had filed a claim, he became an “adversary” to his insurance carrier and was not entitled to see documents in his file that might support his claim.  In return for his annual premiums exceeding $80,000.00 per year, this is what his money bought for him.  An adversarial relationship.

     Of course, we’re suing.  Soon, that report and all the other documents in the file will be in the hands of his attorney.  He will recover all the money owed to him by his insurance carrier along with (most likely) punitive damages and his attorney fees.  He is, indeed, an “adversary” to his insurance company – but not because he filed a claim.  Rather, it was the insurance carrier that decided to vexatiously withhold money that was due to him under his contract rather than to pay him what he was entitled to.  That action taken by them, and not their claim, is what made him an adversary … and a worthy one, at that.

“My Contractor Says My Roof is Shot but My Insurance Company Won’t Pay”

June 14, 2021 By in Home Owner Insurance Issues, Home Repairs, Property Insurance Leave a comment

   

Reporting damage and hoping for the best.

 

     I will get at least one phone call this week, as I do every week, from someone who is upset with their insurance company for denying their claim for a “leaky roof”.  It usually goes something like this: “My contractor told me my roof must be replaced.  There is hail damage to it, but my insurance company refuses to pay for it.  I need your help.”   Before they call me – actually, before they call their insurance company and file a claim – there are things they should know.

     The first thing an insured home or business property owner should know is their duty to prove their loss when they file an insurance claim.  Simply reporting damage to their insurance company does not fulfil their duty under the insurance contract to prove they have a covered loss.  Most policyholders are unaware that they have this burden of proof and will merely report damage to their insurance provider and then leave it to the insurance company and their adjuster to prove their claim for them. 

     As one can reasonably expect the effort to prove the policyholder’s claim is not always accomplished to the satisfaction of the insured policyholder, when expecting their insurance company to be zealous in proving that the policyholder is entitled to money.  Instead, they find that the insurance company has sent their adjuster to the damaged property primarily to fulfil their duty under the insurance agreement – the duty they have to prove that an exclusion to coverage under the policy exists and payment should be denied.

     The contractor may have told the policyholder the truth.  The roof might need replacement and there might be hail damage present.  Neither of these two facts, however, sufficiently prove that the loss is covered under the insurance policy.  

     Before filing the claim, the prudent insured property owner will first determine the following:

     1. When did the hail damage occur?  A shingled roof can last twenty to thirty years and, over its lifetime, will be struck by many hailstorms and can be insured over that same period by many different insurance companies.  Which hailstorm is being reported to be the one that caused the damage and what company insured the roof on that date?

     2. How significant is the hail damage?  Roofs will age and incur damage from normal wear and tear, a condition that is excluded under the insurance policy.  Is the hail damage to the roof significant enough by itself to warrant a replacement, or are there only a few selected shingles damaged by hail and the rest of the roof needs replacement for other natural (and non-insurable) reasons?  

     3. Is there evidence of hail damage to exterior surfaces other than the shingles?  While resilient composite shingles are designed to deflect hail strikes to minimize damage, other surfaces are not.  Damaged shingles should also be surrounded by other evidence of hail strikes to soft metals such as appurtenances, gutters, downspouts, fascia, mailboxes, HVAC units, patio furniture, wood deck surfaces, lawn furniture and other surfaces struck by the same hailstorm.  Not only can this additional damage be included as part of the claim, but it will also serve as proof of the severity and (sometimes) the date of the storm. 

     These are a few of the things that one must consider when proving their coverage for a loss to a roof due to hail damage.  There are more, and a good roofing contractor can assist a policyholder in compiling evidence to provide to the insurance carrier that the damage is covered under their insurance policy. 

     Needing a new roof and having a valid insurance claim for damage to an existing roof are not the same thing.  Policyholders who file insurance claims have the duty to prove their covered loss.  The best time to prove it is to themselves before they file the claim so that they may, in turn, prove it to their insurance company when the adjuster arrives.

To prove a covered loss in the manner required for a successful insurance claim is not always easy to do.  When in doubt, consult with a licensed public adjuster.  Don’t get mad … get paid.

Is Your Home Under Insured?

May 23, 2021 By in Property Insurance Leave a comment

Photo by Gabby K on Pexels.com

Did you pay $200,000 for a house and insure it for $200,000 thinking that you are fully covered if your home is destroyed?  Many do.  Many are wrong.

The resale value of your home or the amount that you borrowed to buy it is NOT what you should insure.  Why?  The first reason is that the policy itself excludes coverage for “loss of value”.  A reduction in the value of your house is not covered under your policy.  The second reason is that, should the home be totally destroyed, the cost to rebuild it will depend upon the inflated values of building materials and labor at the time you rebuild it which is likely to far exceed the amount that you paid for it.

Since the Spring of 2020, the costs of construction materials have increased from 15% to 75%, with lumber leading the way.  The cost of building and reconstructing similarly sized homes has increased by many tens of thousands of dollars in only the last year.  That number will continue to rise for some time to come.

Your mortgage lender will insist that their interest in the home be covered.  Thus, at a minimum, your lender will require your home to be insured for the amount they loaned you.  That covers and protects THEIR financial interest in the home, but what about yours?  If the loss is not a total loss, will the amount of your total insurance be enough to cover today’s costs for lumber and other material while you rebuild and keep up on your house payments during the reconstruction process?

Seek the advice of a reputable builder in your area as to the cost per square foot of building a new home similar to the style of your home.  Multiply that figure by the size of your home in square feet.  That figure will closely represent the dollar amount for which your home should be insured.