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What to do if the homeowner insurance company denies or lowballs your claim?

When buying homeowner insurance, you are paying for peace of mind to protect yourself from a financial disaster. The disaster does not have to come in a form of hurricane or tsunami. A ruptured water pipe can cause tens and even hundreds of thousands of dollars in damages. A small kitchen fire can fill in smoke and make your entire home unlivable. A partial collapse can make the entire structure a total loss. Whatever it is, you turn to your insurance company to restore your property to the condition that it was before, replace your personal property, and get yourself and your family back on track. This is why you set the automatic payment on your credit card to pay insurance premiums. You are happy now that you paid them religiously. You think that this is the insurance company’s chance to perform its part of the promise to help you with the loss and you are ready and eager to accept the assistance. In fact, the insurers have an obligation to act in good faith and try to settle your claim quickly and fairly. Unfortunately, this is not always the case.

Some insurance companies start delaying investigation by assigning multiple adjusters, requesting additional information that has little to do with the claim, and coming up with other excuses to keep money in its pockets. Some retain contractors and experts that are willing to conduct biased investigation to reduce or deny your claim. Other bad faith tactics include failure to communicate promptly, presenting a repair estimate with a number of missing items, applying wrongful depreciation, and interpreting insurance policy provisions in unreasonable manner to avoid paying part or the entire claim. Generally, if the insurance company is knowingly unreasonable in handling your claim, there is a potential for bad faith handling of the claim. And if you don’t know whether the insurance company is reasonable or not, contact an attorney specializing in bad faith insurance litigation to help you determine it.

Let’s say your insurance company is unreasonable and outright fraudulent in handling your claim. What now? The stakes are high, as unlike in contract claims, consequential and punitive damages are available if you can prove bad faith on the part of your insurance company. The insurance company may be on a hook for emotional distress, attorney fees, and punitive damages. So a claim that would cost an insurance company only $30,000 if handled properly can turn into a million dollar jury verdict.

Through my years of experience, I have become accustomed to similar scenarios. In one case, an insurance company denied a claim for water damage claiming the damage resulted from a long-term leak, which is excluded under the policy. The insurance company refused to make repairs. As a result, mold spread throughout the home and forced the policyholders, an 80-year old woman, to move out of her home and into a local motel. Once our team stepped in, and a thorough and un-biased investigation was conducted, the findings revealed that the damage was actually caused by a ruptured pipe, which is covered under the policy. The case was shortly settled for a substantially higher amount than it would have cost the insurance company to make the initial requested repairs. The settlement amount considered the cost of extensive repairs, loss of use, emotional distress, and attorney fees that the policyholder incurred in obtaining her policy benefits.

Insurance is a great product when it works right. While some insurers perform their part of the promise, others try to save money at the expense of their policyholders. If this occurs to you, an experienced attorney should be able to help. Feel free to contact our office for a free evaluation of your case.

Evgeni Halavanau, Esq.

prior to founding his firm, Mr. Halavanau worked at a firm specializing in bad faith insurance litigation and successfully represented policyholders against insurance giants such as Farmers, State Farm, AAA and other companies.

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