What to do When Your Homeowners Insurance Claim is Denied

Homeowners insurance claims are denied every day — sometimes legitimately, sometimes in error, and sometimes for reasons no one understands. If you’ve suffered an insured property loss, and your insurance company denied your claim, there are steps you can take to challenge your homeowners insurance claim denial.

Understand why your claim was denied

Your insurance company will mail you a formal letter explaining their reason for denying your claim; if your insurance company does not send you a formal letter, your claim has not been denied. This letter explains the specific language in your policy that justifies the claim denial. Read the letter carefully, and compare their explanation to your understanding of your policy. If there is a legitimate reason for denying your claim, i.e., the premium wasn’t paid, or the type of loss (peril) is explicitly excluded from your coverage, there is nothing more you can do.

However, if after comparing their explanation to your understanding, you still believe your property damage should be covered, discuss your differing views immediately with your insurance company’s claims adjuster and your agent, if you have one. Persuading a company adjuster to reverse a claim denial is not easy. Don’t give up if you can show where coverage is promised in your homeowners insurance policy.

File an appeal

If you aren’t getting any satisfaction from explaining your position to your insurance company’s claims adjuster, you will need to file a formal appeal. You only have a limited amount of time to do this, and the clock starts ticking when your claim is denied. The appeals process that you must follow is outlined in your homeowners insurance policy.

Filing a formal appeal triggers a review of your denied claim. Include with your appeal as much evidence and documentation as you can to support the position that your damages should be covered. The more organized you present this information, the better your chances of getting more than a cursory review of your denied claim.

Consult a property insurance claims professional

Seeking advice from a licensed public insurance adjuster is the smartest move a homeowner can make after suffering an insured property loss — even if the claim is already denied.

A public adjuster can verify your coverage, document and value your losses, and negotiate the maximum settlement allowed under the terms of your homeowners insurance policy. The sooner you contact a public adjuster, the more he or she can do to help you recover.

If you’ve already reached the point that you have to sue your insurance carrier, find a qualified attorney with expertise specifically in property insurance claims. Be sure to get references that show a successful track record settling property insurance claims, not just an understanding of property law.

File a formal complaint

The insurance industry is exceedingly regulated, yet courts in every state are overrun with property claims disputes and bad faith lawsuits.

As a policyholder in good standing — that is, your premiums are paid — you insurance carrier is obligated to process your property claim fairly and based on its own merit. If the treatment of your claim falls short of this minimum benchmark, you have the option to file a formal complaint with your state’s insurance commissioner.