Year after year, you send that premium payment for your homeowners policy. When accidents happen, you expect the insurance company to cut a check for the full extent of the damage to your home, no matter the amount or what caused it.
It doesnâ€™t always work that way. What you think youâ€™re entitled to under your policy and what the carrier believes they owe you are often two very different dollar figures.
Donâ€™t take it personally. Remember, carriers have to price your coverage based on statistics, probability and risk. They can only pay to the extent a claim is based in cold, hard facts, policy language and evidence.
If your claim falls under one or more of the criteria below, thereâ€™s a good chance it will be reduced or denied altogether. But alas, insurance companies donâ€™t take claims personally, either. Weâ€™ll follow with ways to ensure your property is covered properly and recovered adequately.
Why Are Homeowners Insurance Claims Denied?
Not Enough Information
As the homeowner, itâ€™s your responsibility to file and prove your claim. Insufficient documentation of damage to your property wonâ€™t help your case. Neither will a lack of a complete inventory of valuables on or in your property prior to the loss.
Taking Too Long to File
If you take too long to file the claim, your chances of a satisfactory payment go way down. Policies typically contain time-sensitive requirements for filing the claim and documenting damage.
If your premium payments are late and result in any lapses in coverage, you run the risk of property damage occurring when your policy is exempt due to non-payment.
Threat of Fraud
Unfortunately, insurance fraud is a predictable reality. Therefore, your carrier will send their own claims adjuster to investigate almost every claim. Anything that raises questionsâ€”whether in the claim or in your initial applicationâ€”could be game over. If your losses are serious, particularly if the policy covers your business, consider hiring an independent adjuster.
Claim Type Not Included in Coverage
No homeowners policy covers the entire house and everything in it, nor does it cover against every possible source of damage or loss. Common policy â€œexclusionsâ€ include earthquakes, floods and water/sewage backup, or other regional risks.
Loss is Close to Your Deductible
A typical homeowners policy deductibleâ€”the amount you pay before the claim kicks inâ€”is $1,000. If the estimated loss is close enough to your deductible level, carriers will deny the claim, though in that scenario you wouldnâ€™t want to file one.
Perilous Claims May Not Be Covered
In insurance speak, â€œperilsâ€ refer to things like fire, theft, lightning and hail. â€œOccurrencesâ€ speak to the actual losses, such as a destroyed kitchen, or soaked carpet and furniture. Lower-end policies only cover a certain number of perils, others cover all of them.
Somebody (or Something Elseâ€™s) Fault
If it was your contractorâ€™s negligence that collapsed the foundation or your neighborâ€™s tree that totaled your SUV, your insurance company isnâ€™t responsibleâ€”and your policy doesnâ€™t apply.
Imagine an insurance carrier paying to fix a rusted-out car bumper after an accident. Doesnâ€™t happen. Same goes for an old roof full of worn shingles and leaks. If a claims adjuster finds evidence of poor maintenance or excessive wear-and-tear of your property, chances are the claim will be denied.
Avoid the Dreaded Denial
- Document all damage and file a detailed itemized claim to your insurance
- Notify your carrier as soon as possible (even if in the middle of the night) of any loss and know the time limits for filing a claim
- Donâ€™t miss a premium payment
- Know what your policy covers and excludes; obtain adequate coverage for more â€œperilsâ€ if available
- Do everything possible to maintain the property before an event, and to mitigate the damage until an adjuster assesses the damage