Dealing with Underpaid Home Insurance Claims

Posted on May 4, 2023


Long Nguyen | author

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ICHQ | Site Author

You’ve faithfully paid your homeowners insurance premiums, knowing that should a qualifying event arise, your insurer will take on the financial burden of repairing or rebuilding your home. Unfortunately, now that the time has come, you discover that the insurance company wants to shortchange you.

Insurance companies often attempt to protect their profits by undervaluing and underpaying claims.

Dealing with underpaid home insurance claims can be frustrating. If your insurance company attempts to underpay your claim, the bad faith insurance attorneys at Insurance Claim HQ can help you pursue full compensation for your claim. We have the experience and expertise needed to face insurance companies and seek the settlement you deserve. Contact us for a free case evaluation.

Why Do Home Insurance Companies Underpay Claims?

It’s not uncommon for policyholders to complain of underpaid claims. Many policyholders find that after making a claim for the damages to their property, their insurance adjuster’s estimate is too low.

It’s a strategy by homeowners insurance companies to provide lowball offers to policyholders. If they can offer just enough to satisfy the policyholder, they can get away with keeping their profits high.

Some of the reasons why an insurance company may underpay a claim include:

  • Hasty investigations: Your insurer may rush through the investigation process, mistakenly failing to take into account some costs.
  • Offering actual cash value: Rather than pay the cost to complete a full repair or replacement of damaged property, insurers may pay the actual cash value to save money.
  • Interpreting your policy too closely: Insurance companies will try to use a narrow reading of your policy in order to exclude certain repairs or damages. You can avoid this by being familiar with your policy and asking for clarification on any language before you need to file a claim.
  • Underestimating labor costs: Insurance adjusters may not estimate the cost of materials or the labor costs to repair or rebuild parts of your home. The result is offering a payment that’s too low.
  • Thinking the insurer would accept underpayment: Insurance companies know that policyholders are less likely to contest an underpaid claim than they would total denial of payment.
  • Insurance bad faith: Insurers may deliberately offer an unfairly low figure for your claim as a form of insurance bad faith.

What You Should Do If You Receive a Home Insurance Underpayment

If your insurance company underpaid your claim, you shouldn’t just give up your right to full compensation. Instead, you should fight to get a fair settlement.

Here are the steps for disputing a home insurance claim:

Review your contract and know your maximum coverage amounts

Carefully review your insurance contract to confirm the terms and the maximum coverage amounts. If your house was damaged significantly by a tornado, for example, you should check your contract for the maximum compensation amounts that you’re eligible to claim.

Contact your insurance agent or company

After reviewing your contract and analyzing your initial claim paperwork, contact your agent or insurance company’s claims department about the estimate you received from the insurance adjuster. Ask them if the adjuster can re-examine the property damaged or lost. Ask them if your claim can be reviewed again based on new evidence.

While the company might agree to review your claim again, that doesn’t mean that they will change the settlement offer. If that’s the case, the next step would be to obtain a third-party appraisal.

Hire a private claims adjuster

Hiring a private claims adjuster allows you to get an independent estimate of the damage to your home. The independent estimate will either confirm the accuracy of your insurance company’s settlement offer or provide leverage in your argument for increasing the settlement.

If you find yourself in the latter situation, reach out to your insurance company and inform them about the independent estimate. If you present your case, but they still fail to pay you the settlement you deserve, the next step will be to take legal action against them.

File a complaint and hire an attorney

If you fail to reach an agreement on a claim with your insurer, the next step is to file a complaint with the state and seek legal remedy through an insurance bad faith attorney.

How an Insurance Bad Faith Attorney Can Help You Get a Fair Settlement

After faithfully paying premiums for your home insurance policy for several years, it’s only right that your insurance company shoulders the burden of repairing or rebuilding your house should a qualifying case arise. However, that’s not always the case.

If your insurer offers to pay too little for your home insurance claim, an experienced attorney at Insurance Claim HQ can help you get fair compensation. Our attorneys have decades of experience negotiating property insurance claims and can help you get the maximum settlement. We’re dedicated to fighting for the rights of policyholders to help them get what they deserve. Contact us to schedule a free consultation.

FAQs About Dealing with Underpaid Home Insurance Claims

What are the signs that your insurer underpaid your claim?

The warning signs that your home insurance claim was underpaid include missed damages, relatively low estimates, and an insurance company denying a portion of your claim.

Do you have to accept your insurance company’s first offer?

If your insurer offers a settlement that’s too low, you’re not obligated to accept it. You have the right to dispute the offer and request that you be paid the full settlement.