In my experience, Insurance companies are not “Out to getcha.” However, many variables go into the claims process, and miscommunication and lack of information could be significant factors for this common misconception.
Insurance is a tricky industry, and there is enough legalese to make your head spin. How are we supposed to keep up with all the technical terminologies and expect fair treatment if we file a claim? If you have ever filed a claim and felt that the deck was stacked against you, or you’re just curious about what the claims process looks like, then you have come to the right place. Keep reading, and I will dispel some of the mysteries of the claims process and help you navigate away from some pitfalls.
Before the “Storm”
Before I get into the claims process, let’s talk about preparation. No one wants to do it, but it is the single best thing you can do before incurring any property damage. Review your policy! Insurance policies are lengthy, tedious, and full of incomprehensible jargon. Still, it is essential to know what you are paying for and what kind of coverage will be afforded to you in the event of a loss.
Why is it important to review your policy? You may have endorsements or clauses in your policy that prevent you from receiving full benefits from a covered ‘loss’ or ‘peril’ (hail storms, tornadoes, etc.), or you may be overpaying on your policy for coverage you don’t need. Be thorough and do your research. Familiarize yourself with your coverage to have a general understanding of what to expect if you have to file a claim. Review your policy with your insurance agent and ask them to define the terms and conditions clearly.
Your property is damaged, now what?
First and foremost, safety. Assess your surroundings and notify the authorities if you feel unsafe. Next, mitigate the damages if you are able. For example, if your toilet is overflowing, cut off the water supply. If your trash can is on fire, dump some water on it (of course, call the fire department if it is beyond your abilities to extinguish). It is your responsibility to prevent further damage from occurring, if possible. Be safe and use common sense. Detailed notes are usually taken if you file an insurance claim. If it is discovered that you did not prevent additional damages from happening, you may be found negligent, and coverage may not be extended to you.
You will want to gather as much information about your situation as possible. Write down names and contact information of those involved, be sure you can speak to how the event occurred and how you prevented further damages, take lots of photos (one photo could make all the difference if you need proof of existence), and note the time and date. The date of the event is significant and, in some cases, will determine if coverage will be afforded. Time plays a considerable role when filing a claim. If you wait too long to file a claim, it could potentially affect coverage decisions. Remember, you have to paint a picture for someone who wasn’t there. Gather as much documentation as you can to clearly explain your event, and your process will go smoothly.
Now, you will want to assess the damages to see if it is worth contacting your insurance carrier. If the damages do not appear to exceed your deductible, then you will not want to file a claim. Filing a claim, even if there is no payout, can potentially increase your premiums. It is a good idea to contact your insurance agent and inquire if filing a claim will affect your premiums. If you are unsure about the extent of damage and how to assess it, contact a local licensed and insured contractor. Most contractors do not charge for an inspection. A seasoned contractor will be able to review the damages and advise if you should file a claim or not, pending the amount of your deductible. Once the damage is assessed, you can discuss repairs with your contractor, and if a claim is filed, they will be able to coordinate directly with your insurance carrier to expedite the process.
Contacting your insurance carrier and filing a claim
Filing an insurance claim can be a relatively painless process. To make the claims process as seamless as possible, be sure to have your documentation, photos, and dates handy. Your carrier will want to know the severity of the damage and if said damage has displaced you and your family, what caused the damage, and the date/time. After a brief Q&A, they will let you know what the next step will be.
The Estimate & The Initial Payment
Now that you have filed a claim, your insurance carrier may send out an insurance adjuster to gather documentation and write an estimate for repairs. Once their inspection is complete, you can expect to receive an estimate and a check in the mail, usually within seven days. With your estimate and ‘initial’ payment in hand, you can reach out to your contractor and begin the repair process. First, let your contractor review your estimate to ensure they can complete repairs with the given funds. If the estimate seems deficient, your contractor can submit a ‘supplement’ to your insurance carrier for consideration. As long as your contractor can adequately illustrate the necessity for the supplement, the insurance carrier should not have an issue approving additional funds. The key here is proper documentation and explanation of the need.
Here is an important note to keep in mind when reviewing your insurance estimate or insurance summary, as it may also be called. Your insurance agent or carrier may have said what type of policy you have: RCV (Replacement Cost Value) or ACV (Actual Cost Value. What does this mean to you? In an RCV policy, your estimate will have a depreciated value (money held back until work is complete). Depreciation is determined by the age and condition of the estimated item. You will receive this depreciated amount once the estimated item has been repaired. The same criteria will depreciate the estimated item in the ACV policy, but you will not receive the depreciated amount regardless if the item is repaired or not. Identifying an RCV/ACV policy is vital for your contractor and will determine if they can complete the work for the funds available or if you, the homeowner, will have to come out of pocket.
At this stage in the game, you should have a contractor lined up, the size of the job has been evaluated, and a repair contract has been signed. Your contractor should determine the scope of the job and advise if they anticipate any out-of-pocket expenses. There is always a possibility that your repairs will run into areas of your property that will not be covered by insurance. It is best to discuss these issues with your contractor so that both parties will have the same expectations. It is not unreasonable to expect strong communication from both your contractor and insurance carrier. Your insurance carrier will most likely reach out for a status update on the project from time to time. Just know that all parties involved are vested in completing your project as quickly and effectively as possible. Insurance carriers have specific deadlines they must meet according to the standards set up by the Department of Insurance. These standards were developed to ensure the homeowner is appropriately taken care of in a timely fashion. Contractors are always on a timeline. In construction, time is money, but happy customers are a must.
Project Completion & Final Payments
We are now at the last stage of the process. Your contractor will inform you that all items on the contract are now complete, and it will be time for the final payment. Before you sign the check over to your contractor, insist on a final walkthrough. This will be the time to ask any final questions, observe the quality of work, and ensure your expectations have been met. If you are working through your insurance carrier, they may require documentation that the project is complete before releasing the final payment (the depreciation check). Your contractor should provide any documentation required by your insurance carrier and will most often send your carrier a final invoice to release the final payment. Lastly, if you are satisfied with your contractor’s work, by all means, proceed with your final payment. Congratulations, your insurance claim is complete!
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