When submitting a Homeowners Insurance claim follow these steps to ensure your claim includes the information necessary to obtain maximum benefits.
Notice of Claim Letter
When you submit a homeowners insurance claim, you should send the insurance company a “notice of claim letter.” In your letter, you should provide the names of who’s insured, your policy number, the date, time and location of the event, the details of the claim you are making.
You should divide your claim into all the relevant categories involved, such as Dwelling Protection, Personal Property and Addition Living Expense. If the information you are providing is incomplete, you should say so.
Dwelling Protection – in your notice of claim letter, you need to submit numbers for the cost of repairing or replacing your dwelling. How do you come up with the numbers? Your homeowners insurance claim should be based on detailed bids (not estimates) from reputable licensed contractors. Go out and hire a contractor to come to your house, evaluate the damage and give you a bid for the full cost of rebuilding or replacing (including building code upgrades).
When you come up with a number, do not attempt to adjust it for deductibles or limits. Those issues can be complicated and stir up disagreement.
Personal property – if you have the information you should provide a detailed list of the replacement cost (not depreciated value) of all items lost or damaged. If you have special coverage for things like jewelry, collectables or art work, be sure to include those items. If you do not have this information yet, just say so. If you have photos or receipts, put them in the letter with an explanation.
Additional Living Expense (ALE) – you have a right to obtain “like kind and quality” accommodations. If you lost a nice 4-bedroom dwelling, you are entitled to rent a nice 4-bedroom dwelling – paid for by your insurance company. The insurance company can’t just stick you in a shack in the woods. It must be “like kind and quality.”
Be aware of restrictions in your policy. You have a total dollar amount for ALE coverage. If you go over this amount before your home is fixed, you’ll need to pick up the rent yourself. Do not underestimate how important this is. If repairing your home takes longer than you thought, and you run out of ALE coverage, and your back is against the wall because you have to pay rent, you might find that you have less bargaining power against the insurance company, and they might under settle your claim.
You have to abide by several duties when you submit a homeowners insurance claim. You have a “duty to cooperate,” which means you have to tell your insurance company everything it needs to know to investigate and process your claim. You need to make yourself available to speak with insurance company representatives. You also need to make your property available for inspection.
You have a “duty to preserve evidence of the loss.” Do not remove or alter any evidence of the damage without written approval from the insurance company. If you need to repair something, to mitigate the loss for instance, make sure you get written permission from your insurance company. Save all written correspondence.
If requested to do so, you have to provide a “sworn proof of loss.” You’ll have to prepare an inventory of your personal property. Everything you submit to the insurance company must be precise and accurate. Do not cut corners or exaggerate your losses. If you happen to make a mistake, write a letter to your insurance company and explain the correction.
When your insurance company responds keep all correspondence and memos of all conversations, including the names, job titles and contact information of all insurance representatives.
Even though you are under pressure from the emotional toll of your loss, you need to try to be polite and respectful in all communications. If you are not, the insurer may well take advantage of the situation to justify its own actions.
Understand that insurers are not permitted to engage in unreasonable delay, misrepresentation, or low-balling tactics. If you are underinsured for the losses suffered, figure out why. Was it the result of your own actions? Did the insurance company attempt to decrease its exposure in the event of a large loss? In situations involving the latter, the insurance company may be responsible for the underinsurance.
Ray Bourhis Associates