What can I do if my insurance claim is underpaid?
I get calls all the time from insureds and contractors asking for our help because the insurance carrier has severely underpaid their claim. I had one yesterday that was originally denied and the insurance carrier said they had no damage on the property. They even sent their engineer out who said there was no damage to the property. Yesterday, they sent us a check for $208,000. You have to ask, "Why?" How could the insurance carrier be that far off? Why would their engineer have lied? Why would their adjuster have lied?
Sadly, it is all about money. They have it. You want it, but they don't want to let it go. It is your money, though. You have paid your premiums for years. They made a promise that you would be covered and then broke that promise when you needed them most.
Now, you are left with the question and the problem. Do you take it on the chin and pay for your loss again? Do you hold the insurance company accountable? If you do, then how?
You could file a complaint with the Department of Insurance. They are supposed to be consumer advocates right? Well not according to them. In fact, they will tell you that they have no power or ability to force the insurance company to change their mind or follow the law. They will tell you to call the Consumer Protection Agency, and the Consumer Protection Agency will tell you to call the Department of Insurance. So you play around in this world of bureaucracy and give up. In all the complaints that we have ever filed or seen filed, they have never once helped the insured. Sad, but true. We will often file complaints knowing we will not get a real result out of it but it does burry the carrier in paperwork though. It also helps document your claim and shows that you have done all in your power to resolve your claim with the carrier.
The insurance policy usually allows for a few different options when it comes to dispute resolution. There is usually an insurance appraisal clause, litigation, or mediation. All of these provisions can be helpful, but all of them are useless if the claim is has not properly prepared before hand.
Similar to a real estate appraisal, which determines the value of the property, an insurance appraisal determines the amount of the loss in regard to an insurance claim. In an insurance appraisal, there is what is called an appraisal panel. The appraisal panel consists of 3 members. The insured's appraiser, the insurance company's appraiser, and the umpire. The appraisal panel will determine the amount of the loss and issue the award. In theory, this settles the claim and the award is final. We have done a lot of appraisals and had great success for our clients.
We are not attorneys- I will try to explain mediation, though. Mediation is similar to appraisal except it is done by attorneys. They have a mediation board consisting of three members that will try to negotiate and determine a settlement amount. Again, if the carrier does not like the award there is a risk they will not pay it. Additionally, if the preparation is not properly done it could end in a terrible terrible outcome for the policyholder.
We are not attorneys you should consult with an attorney for legal counsel- When an insurance carrier denies or grossly underpays your claim there is a potential breach of contract and bad faith claim against them. Every claim that we have ever handled the carrier broke the law and breached their policy contract in some way, usually in 10-12 different ways. The problem is that proving bad faith can be very difficult for attorneys when they come into a claim without it being properly documented and prepared.
So what now?
Every case is different- It is essential to look at the facts and merits of each claim. If the carrier will not listen to the voice of reason and dispute resolution is our only option. We will consider the facts of the loss and advise you on which direction we should go. Often times we can avoid litigation and save you thousands of dollars.
It is time to take back control and make sure your greatest investment, and the lives of your families, are cared for and the promises made to you are kept.
Give us a call.