How Do Home Insurance Claim Payments Work?

If your house has been damaged by a natural disaster or an accident, your home insurance provider is likely responsible for covering some of the costs of fixing it. However, when you file your first claim, it’s not always obvious how that process works. You may begin to worry if the process seems to be taking too long or if the first check you receive isn’t enough to cover your entire claim.

Don’t panic just yet, though. Depending on your insurer and your policy, payments may be structured and sent in a variety of ways. Here’s what you need to know about how claims are valued, paid, and used, and what to do if you think your claim hasn’t been paid correctly.

How Are Home Insurance Payments Determined?

There are four main items that are covered by most insurance policies: emergency repairs, loss of use, primary repairs, and personal property damage. These four types of coverage may be paid independently or bundled in the same payment. 

If the damage to your home required emergency repairs or made it uninhabitable (known as loss of use), you may request reimbursement for these costs under many policies. These issues must be addressed immediately, so you usually don’t need to wait for an adjuster before you take action. Instead, you should save the receipts for all expenses related to the damage and submit them to the insurance company with your claim. This amount is usually covered in part or whole, depending on your policy. 

The cost of non-emergency repairs is determined after you file your claim and the insurer has investigated it. The company will send an adjuster to your property to view the damage and decide how much of it is covered. They will also inspect your damaged personal property to identify if replacing it is covered. The adjuster may also give an immediate estimate about how much it will cost to repair.

You may accept this estimate. You may also choose to work with your insurer to find qualified contractors. Many home insurance contracts will allow you to use the estimate or final cost of approved contractors’ work to determine the amount of the claim instead. Which solution you accept may significantly impact how your claim is paid. 

How Will You Receive Your Funds?

Insurance companies will usually deliver your payments by sending you checks. This allows them to send a letter with a full breakdown of your coverage and what’s covered by the check at the same time. In some cases, they may also deliver the funds by direct deposit. You will likely receive more than one payment, so make sure you read any information your insurer sends you before worrying about underpayment.

There are many parties who may be included in the payment check. Depending on your circumstances, the check might be made out to:

  • The homeowner: If you own your home outright, you will most likely receive the check made out in your name alone. This is also how you will receive funds to replace any damaged personal property. 
  • The named insured: If multiple parties are named in your insurance policy as insured, they may also be included on the check.
  • Your mortgage or condominium management company: These types of companies are typically included as named insured if they co-own a property. In some cases, checks may be made to the lender or condo association alone if they take responsibility for repairing the property. For example, mortgage providers often put insurance payments into escrow accounts to pay for repairs as necessary on your behalf. Your mortgage provider can give you more details about their individual policies.
  • Your contractors: If you choose to use an Assignment of Benefits, insurance payments may be made directly to the contractors performing work on your home, so the funds never pass through your accounts.

Contact your insurer if you receive a payment and don’t understand why it is made out to the parties listed on the check. The insurance agent will explain in detail how the company’s policies work and what to do next. 

What to Do If Your Claim Is Underpaid

In some cases, your insurer may genuinely underpay your claim. If you’ve read your policy and claims checks carefully and think your insurance company isn’t fulfilling its contractual obligations, here’s what to do next.

  • Wait to respond. Don’t sign any claims notices or respond to questions immediately. This information can be used against you if you file a dispute later. Instead:
  • Get a second opinion. Talk to an insurance attorney who has experience working with adjusters. They will help you understand your policy in more detail and give you a second opinion about whether your claim has actually been paid in full. 
  • File a dispute. If you have genuinely been underpaid, you can file a dispute with your insurer. Your attorney will help you argue your case and potentially resolve the issue without the need for further action. 
  • Take legal action. If your insurance company continues to underpay you, your attorney will help you take legal action to receive the total amount you’re owed under your policy. 

Ensure Your Claims Are Honored With the Professional Law Group

The last thing you need when fixing your home is to struggle with your insurance company underpaying your claims. If you’ve double-checked your numbers and it looks like the insurer is not honoring your contract, get in touch with the expert attorneys at the Professional Law Group. 

Our team understands how insurance companies and adjusters work, so we can put you on equal footing with your insurer. We have decades of experience helping clients fight underpaid and denied property insurance claims to receive fair compensation. You can learn more about how we can support you through your dispute by scheduling your free case review today. 

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