If your homeowners insurance claim is denied, try this.
The following great piece of advice was written by Russel Ray, a San Diego Property Consultant.
A Client of Russel’s from 2007 called him recently to tell him that his furnace was not working. The reason he waited so long is that it was the first time he was using it.
Insurance companies don’t make money by paying claims, so their first line of defense is quite often just to deny the claim outright. Sometimes they won’t even give you a reason. Other times they’ll say that the item in question is not covered, or has pre-existing conditions. Their thinking is that you’ll accept their decision and go on your merry little way.
Russel suggests the following course of action:
If they deny your claim for whatever reason, ask them to reconsider. The second time around your claim will actually get “processed,” meaning that you’ll probably get more action than just a computer-generated letter denying your claim.
If they send someone out to look at things and then deny your claim because of “pre-existing conditions,” well, that phrase is standard denial language. Call them on it with this little tidbit that has worked for me and my Clients:
Dear Insurance Company:
You had the opportunity to inspect the “item in question” prior to issuing a policy and accepting my premium payments. Because you did not do that, the fact that you issued a policy and accepted my premium payments mean that you warranted that the “item” was in insurable condition. Please forward to me at [address] either a check for [repair/replacement] of the “item” or a refund of all my premium payments from [date of coverage commencement to current date]. Thank you.
Modify as necessary.
Now send it by overnight mail to the insurance company and a copy, also by overnight mail, to the insurance commissioner in your state. Make sure that the copy you send to the insurance company notes that a copy has been sent to the insurance commissioner.
Insurance is regulated in all 50 states, so while you might not have an “insurance commissioner,” there is some Top Dog somewhere who is in charge of your state’s insurance industry.
Even if your policy excludes pre-existing conditions, if the insurance company didn’t send anyone out to look at everything prior to issuing you a policy, they can be held accountable. Once they understand that they have a serious and knowledgeable Client on their hands, it’s far less expensive to just send you a check and be done with it.
Russel’s experience is that every time he does that for one of his Clients, the insurance company sings a new tune. In fact, sometimes, a check arrives in their mailboxes a couple of days later, also by overnight delivery.
Russel also states that, of course, all of this is predicated on you repairing any problems that were noted in your home inspection report, and that you actually read the fine print in your home insurance policy. Nonetheless, it doesn’t hurt to try.
Two of Russel’s successes to date were:
A check for $11,950 for plumbing problems. All the claimant had to pay was her $50 deductible, which had been deducted from the $12,000 plumber’s invoice.
In this most recent episode, the insurance company agreed that the furnace was covered under their policy and that it would be repaired if possible, or replaced if repair was not possible. Russel’s Client’s deductible is $100.