The following is a guest post:

The purpose of home insurance is to provide a safety net for when the cost of replacement or repair exceeds the financial capabilities of the policy holder. As such it can be disastrous when a claim to cover such cost is denied. While a denial is devastating, it isn’t the final word as long as you are persistent and well prepared for the appeals process. So here are a few things to keep in mind should you ever have a claim denied.

Try and Buy the Best You can Afford in the First Place

The best remedy is prevention, so try your best to get value for your money when in the shopping phase. First make sure that your prospective insurer is in good financial standing and won’t be closing its doors anytime soon. Also look for a policy that is adjusted for inflation over time and has a cancellation clause. Finally, make sure that whatever insurance policy you decide on the pay-out limits are appropriate to your building and your contents. Additionally, if you have special contents (i.e. a gun collection, valuable art work, etc.) see that the insurer offers appropriate add-ons for coverage.

Know What Your Policy Does and Doesn’t Do

While purchasing a home insurance it’s important for you to understand cover to cover what your policy guarantees and what specifically your policy excludes. Feel free to take notes and to even write on your copy of the contract. Just make sure that if you do not understand, you let your insurance agent know so that they may try to better explain it (I find asking for specific instances to illustrate a point help me better understand). Of course you won’t remember much of what is said, but at least you will have some grounding as to how your policy works for when you need to use it. If you are considering making a claim, make sure you review your policy; if your policy has been destroyed ask for a new one from your insurer.

Talk It Over With Your Agent

Be sure to discuss your possible claim with your agent before filing, as there can sometime be penalties associated with claims denial (for example, losing a no-claims bonus, should you have one). If your agent is not forthcoming with helpful advice, contact a third-party agent who can review your claim in the context of your policy without any conflict of interest (for a fee, naturally).

Keep Track of Paperwork

If your claim is denied make sure you keep a copy of the explanation of the denial as it will be useful should you choose to appeal or bring suit against your insurer. Review the reasons for denial against the terms of your policy to check for any inconsistencies. Additionally, make sure the denial wasn’t based on a ‘processing-error’ such as a timely filing violation (usually this has dubious legal standing in most places).

Make an Appeal

Only a little more than half of home insurance claims made are ever successful. Though of those denied, only about 1% of policy holders ever try to appeal the claim. However of this 1% who do appeal, about half of those receive some sort of relief from their insurers in the end. Try and use the terms of your policy to refute the points of the denial explanation.

Get a Lawyer, and Dig in for a Long Fight

Should your appeal be rejected, find a lawyer who specializes in this type of law. Lawyers almost universally provide consultations free of charge. Based on this interview, lawyers will decide if your prospective case has merit enough to proceed with litigation. And just because one lawyer says no, doesn’t mean another won’t, so shop around. Otherwise be prepared for a long and drawn out process that can take years.

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  9 Responses to “Things to Keep In Mind When Appealing a Home Insurance Claim Denial”

  1. Paper work and proof . You must keep track of everything when appealing a denied claim. Hopefully, you do not have to resort to the lawyer. it can get costly real fast.

  2. I really like your first suggestion, buy the best insurance you can afford. The lowest premium is not always the best choice.

    • Right, the saying “you get what you pay for” definitely holds true when it comes to insurance policies. If the premium is too good to be true then it probably is…

  3. Always important in knowing the ins and outs of your policies. :)

  4. One of the most important things to know is “you can’t win if you don’t know the rules”. It is always important to keep records and know the details of your insurance policy. Research terms and definitions that you aren’t familiar with because they can be used against you.

    • I would have to agree with on this one. I am a “read-the-fine-print” kind of guy (boring…) so insurance guys and other service providers with lengthy contracts hate dealing with me. I am always asking for them to explain why they want me to agree to arbitration or if we can change words like “and”, “of” and “or”… The Devil is in the details…

  5. Insurers love to take your money for the policy but unfortunately there are so many fraudulent claims that they can be over-vigilant when you come to claim yourself. Fortunately I have had very few claims myself – one car write off 20 years ago and Maria’s glasses were broken 5 years ago. Insurance is one of those things that you only know how good it is when you need it and you hope you never do!

    • I often wonder how a claim would be handled by insurance company’s that offer renter’s insurance. The premiums are usually quite reasonable so it would be interesting to see if they paid quickly or if it took a long time to assess the loss (which would be fairly subjective process since property is usually not itemized ahead of time) and receive payment.

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