Property insurance is one of those expenses that seem unnecessary until it isn’t. If you’ve taken steps to protect your property with a policy, you understand that peace of mind is valuable. It’s worth paying a little every month to ensure that you won’t be left high and dry if the worst happens. You can just file an claim and be compensated for your loss.
Of course, that’s only true if your insurance company has integrity. Some providers value profit over their customers’ well-being. They may try to avoid paying for your claims in bad faith.
That’s when things get complicated. You have a right to complete good faith payments. Here’s what you need to know about property insurance, how to tell if your claim should be covered, and what to do if your provider isn’t living up to its promises.
How Property Insurance Works
Property insurance and the more specific homeowners’ policies are valuable types of protection against accidents and disasters. When you have insurance, you agree to pay a small monthly or yearly fee to the provider. In exchange, they promise that they’ll cover up to a specific amount of damage to the property from certain types of events.
Insurance companies determine how much to charge for a policy by using complex calculations. They consider the probability of a particular event happening and the amount of money they’ll have to pay if it does happen. That’s why larger homes cost more to insure than smaller ones and why flood coverage is more expensive along the coastline.
Beyond that, it gets more complicated. Many providers have specific technical requirements surrounding the issues they’ll cover. Depending on the provider and where you live, you may need to get specific extra coverage to protect against flood, fire, earthquake, or tornado damage. Each policy is unique, so it’s essential to understand what types of damage you’re protected against.
Still, as long as an insurance claim meets the standards set in the policy, the provider should pay it. The problem is that many customers don’t understand their policies. That allows many companies to get away with underpaying and denying claims that should have been covered.
Understanding Your Coverage
The best thing you can do for yourself and your property is to take the time to understand your insurance policies. When you know what your provider should cover, you can spot when you’re not receiving good faith payments. Here’s what you need to know about understanding your property policy coverage:
- The property that’s covered: Homeowner policies cover your “dwelling,” or the specific structure in which you live. Some also include additional structures like fences, garages, and sheds. Other types of policies cover business buildings. Finally, personal belongings are typically covered as well.
- The type of damage covered: There are two main types of policies: those that protect against “named perils” and those that protect against “all risks” with exceptions. Named peril policies only pay for claims made for those perils. Meanwhile, all-risk policies pay for claims for everything except specific excluded perils.
- Standard exclusions to watch for: If you have an all-risk policy, you may still be barred from making a claim for damage caused by water damage, neglect, government or legal action, vandalism, power failure, earthquakes, and normal wear and tear. Check your policy to learn about your specific exceptions.
- Coverage limits: Almost every property insurance policy includes a coverage limit. This is the maximum amount of money the provider will be required to pay out for a claim. Structures generally have a higher coverage limit than personal property.
- Valuation: Policies vary on how they determine how much a claim is worth. Many policies cover structures at replacement price and personal belongings at actual cash value. That means that your home is valued at the cost to fix it or get a new one of equal quality. However, your belongings will face devaluation.
Essentially, your provider should cover damage from the risks included in the policy up to the coverage limit. It will base the amount it pays on its valuation of your property.
Good Faith vs. Bad Faith in Insurance
Good faith insurance payments should be the industry standard. A company acts in good faith when it responds to claims promptly, values property fairly, and determines damage causes accurately.
There are several ways in which a provider can act in bad faith. Essentially, acting in bad faith is withholding benefits due under the policy unreasonably. That can include:
- Delaying claim investigation and payments for unreasonable lengths of time
- Falsely arguing that damage was caused by an excluded peril
- Valuing property below its actual worth
All of these actions can save insurance companies money at their customers’ expense.
What to Do If Your Insurance Isn’t Making Good Faith Payments
If you believe your provider is acting in bad faith, you need to take action.
First, collect your policy information and make sure that you understand what should be covered. Check for exceptions and limits that might apply.
Second, collect proof of both what you’ve lost and how much it was worth. Pictures of structures and properties are essential, as are receipts and comparable items for sale in your area. This can help you force the provider to pay your entire claim.
Finally, get in touch with a qualified attorney. Insurance companies that act in bad faith have experience fighting against claims. The right attorney can help you fight back.
Don’t Let Bad Faith Denials Ruin Your Life
If you’ve already suffered significant property damage, you have enough going on. You shouldn’t have to accept underpaid or denied insurance claims, too. It’s all too common for companies to attempt bad faith payments because they believe they can get away with it.
You can stand up for yourself and get the money you need. If you believe your provider is acting in bad faith, reach out to an expert property insurance attorney. They can help you read your policy and determine what you should receive from your provider. More importantly, an attorney with a proven track record can handle the legal technicalities so you can focus on fixing your property. Take back your right to good faith payments today.
