Property insurance covers many types of sudden and accidental damage, as do property insurance claims. If your property suffers damage, one of your next steps will most likely be to file a claim with your insurer to cover the cost.
In a perfect world, everything would go smoothly. Your insurer would pay you a fair amount for the damage — and do so in a timely manner. And you would both go on your way, satisfied that the system is working.
Unfortunately, sometimes there is pushback against claims that causes problems. In certain situations, claims can even end up in litigation. Why? What should your insurer be doing?
What Should An Insurer Do After You File a Property Insurance Claim?
After a property suffers damage and the owner files a claim, the law requires property insurance companies to investigate a claim, determine if it thinks that the damage is covered by the policy, and if so, the value of the damage.
Essentially, three things can happen after a claim is made.
1) The insurer can accept liability (legal responsibility) for the claim and pay it in full.
2) The insurer can accept liability for the claim and pay less than the property owner thinks is due. This is called “under-paying” the claim; or
3) Deny liability and refuse to pay, no matter how large the damages are.
What If the Insurance Company Does Not Pay the Claim Properly?
A property insurance attorney may be able to contest an underpaid or denied claim and obtain money for the owner.
An insurance attorney who represents a property owner needs to use his or her experience to understand how the terms of the policy, the law, and the facts surrounding the damage all interact to affect the insurer’s obligations.
Sometimes, without going to court, an attorney can contest the insurer’s handling of the claim by showing the insurer that it misunderstood and mis-applied some part of the policy, law and facts, and that when interpreted correctly, the owner should be paid.
Other times, the insurance company cannot be convinced through a cooperative process. In those cases, if the owner and the owner’s attorney think that there is a reason that the insurance company should have paid the claim, the owner’s insurance law attorney can file a lawsuit to enforce the owner’s rights. The lawsuit process is called “litigation.”
Will Your Claim Merit Litigation?
If you did not work with a lawyer from the start, and your claim has been under-paid or denied, you definitely want to reach out to a lawyer who is knowledgeable in property insurance claims in the following circumstances:
If your claim has been under-paid or denied, you’ll benefit from contacting a lawyer sooner rather than later.
This is especially true in the case of disputes. Once an insurance company has denied a claim, the burden falls on you to provide new proof that your claim should be honored. This is where a seasoned property insurance lawyer can help comb through the details.
Remember this from the start: complying with your “post loss obligations” under the insurance policy and thorough documentation is your friend.
Litigation Can Be Worth It
If you must confront an under-payment or denial with a lawsuit, an experienced lawyer will help you through the process.
After a lawsuit is filed:
- the insurer will have an opportunity to respond
- the sides will demand and exchange information through the legal process
- each side will have the opportunity to have their attorneys ask questions of the other in a formal process known as depositions
- the attorneys may ask the judge to rule on legal issues that arise during the litigation
- the parties may agree on their own or the judge may order the parties to attend mediation
Mediation is a session in which an experienced neutral third party tries to help the insured and the insurance company come to an agreement to settle the case. If the case is not settled, it may ultimately go to trial. Because of this, it is important to have an experienced trial attorney on your case. However, the reality is that most cases settle without the need for a formal trial.
Giving insurers the benefit of the doubt, our experience is that insurance companies are busy and make a lot of mistakes. Being more skeptical, we also see that, unfortunately, some insurance companies prioritize profits over their insured clients. They know that most people don’t understand insurance policies or the claims process very well and will accept the insurer’s under-payment or denial of their claim as a final decision.
If a claim has been under-paid or denied a property owner should seek a second opinion from an experienced insurance law attorney. That decision alone could make all the difference in being able to make the necessary repairs and get back to life as normal, or not being able to do so and having to live with damaged property.