You made a responsible decision to purchase your homeowner’s insurance and may even be paying extra for flood and wind damage coverage. Your agent assured you that you would be taken care of in the event of a disaster, and you believed them. Now that disaster has come, and you’re not getting the answers you were hoping to hear.
Here’s a little secret, insurance companies have found that underpaying or denying legitimate claims saves them millions every year. They are making their CEOs and shareholders happy and sticking it to the little guy. You may not want to go through the hassle of fighting them, or you simply may not even realize you’re not getting the full compensation you’ve been paying for, and they depend on that. But when they purposefully underpay, they are acting in bad faith, which is against the law because you signed a contract.
Here are some of the tactics insurance companies use to deny or underpay claims.
Depreciating the cost of labor to fix your damages - That’s right, not only do you get a depreciated value of your property, they may also calculate the labor required to fix it at a depreciated value which is an outright scheme.
Underpaying instead of denying your claim - Insurance companies have learned people are more willing to fight back when their claim is outright denied. Therefore, they’ll offer you less than the total value of your damages with the hope you’ll be relieved to get some money rather than no money.
Paying cash value - Depending on how your policy is written, you may find yourself being paid actual cash value rather than the full replacement or repair cost for the damage to your home.
The assessor doesn’t accurately assess the value of your property - While this may not be 100% deceptive, an assessor may simply not take the time to look closely enough at the damages, so you’re awarded less than you really need to be made whole again.
Delaying payment on your claim - Some insurance companies have found that some policyholders will simply move on with their lives and make the repairs out of pocket by dragging the process out. This is acting in bad faith and is against the law.
The damage was preexisting - Imagine having a cracked foundation and a subsequent mold problem that you’ve been working on getting fixed. Now your home gets hit by a hurricane, and flood waters cause even more mold. Now the insurance company won’t pay because they say all the mold in your house was preexisting.