SHAMIS & GENTILE, P.A., CLASS ACTION LAW FIRMUnderstanding Underpaid Home Insurance Claims

It is an experience with which far too many homeowners are familiar: you make a home insurance claim, trusting that your insurer will honor it. You feel secure in the knowledge that you have diligently paid your monthly premiums for years, and never made a claim. You trust that your insurance company will be on your side and prepared to pay you exactly what you deserve. Why wouldn’t they cover your home repair costs, exactly as they promised to do when you bought the coverage? Then the answer comes back from the insurance company’s agent: they will only cover a certain percentage of your damages or are denying the claim entirely.

Unfortunately, this kind of scenario isn’t exceptional. Insurance companies routinely underpay or deny claims as a way to maintain their profits. To make matters worse, they often don’t even do it in an obvious way. Denying your claim is one thing; subtly undercutting your claim so as to placate you while reducing their liability is something else entirely. Whether your insurer underpays you by 10 percent or responds with a flat refusal, you can and must get what you deserve.

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How do you make a home insurance claim?

The insurance claim process starts when you report the damage to your insurance company. After you have completed and submitted the claim forms, an insurance adjuster will inspect the damage. An adjuster is a company representative who inspects property damage to determine how much the insurance company should pay for the loss. The adjuster will inspect the property and interview about the events surrounding the damage. He or she will then produce an estimate of the costs, and the insurance company will then offer you a payment on this basis.

Can you keep home insurance claim money?

Many people wonder what is supposed to happen to whatever money is left over after repairs have been done at a lower cost than what was initially estimated. Once the insurance company pays your claim and the work has been done, they have fulfilled their obligations to you, and you are free to use the remaining funds as you see fit. You may choose to do the repairs yourself, reduce your costs and use the remainder of the money for something else. It would be your prerogative to do so, as long as the claims process was honest and legitimate. The important thing is to ensure that you receive a fair payment based on an accurate assessment of the damage.

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Why do insurance companies underpay home insurance claims?

Insurance companies have several reasons for not paying claims. To be fair, some of these may be honest errors, but they are often deliberate tactics to justify underpayment.  Some of the most common reasons are:

  • The assessors don’t look closely enough at the damage. In this case, the company may honestly want to pay you the right amount, but the adjuster doesn’t get an accurate assessment of the damage, so you get less than you really need.
  • They misinterpret your policy. Some of your damage might be covered explicitly in your contract, while some of it is not. Ensure that you understand the terms of the policy completely – this is the best way to ensure that you don’t get underpaid.
  • They would rather underpay than deny a claim. If they refuse your claim outright, you are more likely to take action against them. On the other hand, people are more likely to accept money that is offered to them, even if it is less than what they claim. Unfortunately, this gives insurance companies a good reason to underpay. If they can pay less than they need to and get away with it, why shouldn’t they?
  • They pay only the actual cash value (ACV) of the claim, rather than the full replacement/ repair cost.
  • A subtle, but quite common tactic is to depreciate the cost of labor in the calculations. Insurance adjusters will often correctly estimate the costs of parts and materials but then deliberately underestimate the labor costs involved with your home repairs, in order to lower the total amount they need to pay out.

Depreciation of labor costs is a reason for underpaying insurance claims?

The tactic of depreciating labor costs has become common enough for many homeowners around the country to file lawsuits against their insurance providers. An insurance adjuster will typically calculate the ACV of the repair work and then deduct depreciation from that figure, amounting to a reduced claim value. Legal action in Tennessee led the state’s supreme court to rule that insurance companies may not depreciate the costs of labor when working out the cash value of a claim. This ruling has led many homeowners to file class-action suits against their insurers in reaction to this practice.

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Was your home insurance claim underpaid?

If you have filed a claim and you believe that you have been underpaid, you still have options open to you. Before taking the matter up with your insurer or seeking legal advice, the important thing is to gather as much evidence as possible to back up your belief that you have received less than your claim is worth. It is best to escalate the dispute gradually by going through the following steps:

  • First, approach your insurance company. Before you do, go back and look at your policy document, as well as the original claim you filed. See if there is any way you can present better evidence of damage or loss in order to increase the value of the claim. If you can improve the quality of evidence, call your insurance agent or someone in the claims department and raise your queries and objections about the estimate you have received from the adjuster. Ask them to present another estimate or for the adjuster to reexamine the damage. They may agree to review it, but that doesn’t mean they will change their estimate. If they don’t, then you might want to consider bringing in a third party for an appraisal.
  • If you are unhappy with the results of the first step, you can hire an independent appraiser to take a look at the damage and estimate the repair costs. A new, independent estimate will either confirm the accuracy of your insurance company’s appraisal, or it will provide evidence for your argument that the original assessment was too low. If you get a favorable result, approach the claims manager at your insurance company and present your case.
  • Get the help of a home insurance claims attorney. If the insurer still will not revise their evaluation, the next thing to do is to take legal action against the insurance company.

How do I file a home insurance claim lawsuit?

The home insurance claim attorneys at Shamis & Gentile are investigating cases involving homeowners who have filed first-party insurance claims and have been underpaid due to depreciated labor costs. If all of these criteria apply to you, you may be eligible to join a nationwide class-action lawsuit. Book a free consultation, and let us see if the particulars of your home insurance claim case qualify you to sue for compensation.

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About Shamis & Gentile

Shamis & Gentile provides outstanding legal services in Florida and New York. We distinguish ourselves because of our experience and resources, which we combine to handle any kind of case involving personal injury, personal injury protection, class actions/mass tort, and contract disputes.

When you bring your case to Shamis & Gentile, you will always work with a seasoned attorney who has an excellent track record. We are progressive and trusted within the legal community and we are often called upon to settle cases that other law firms may not be able to handle on their own. With us, you can rest assured that your home insurance claim case is in safe hands.