2020 was a year of record-breaking storms that caused billions of dollars in claims across the U.S. Insurance policies are the safety net home and business owners rely on but the property damage claim process is often the second catastrophe experienced when trying to recover.
The aftermath of Hurricane Laura in Louisiana is one example of the challenges policyholders face and many are still waiting for repairs. Out of town adjusters, incorrect pricing, claim delays, and low settlement offers are so prevalent that lawmakers are pushing for change. This is great news for LA consumers but the sad truth is that these same issues exist after every major storm.
Some argue that insurance companies put up barriers in the claims process intentionally to reduce claim payout. Carriers blame claim volume and lack of adjusters after major weather disasters. Regardless, the issues consumers face after major storms show how hard it is to get insurance claims paid fairly.
What are the biggest challenges policyholders face? Read on and let us know if you’ve experienced any of these yourself by joining the conversation on Facebook.
1. Inexperienced Insurance Adjusters
One of the biggest challenges policyholders will face is inexperienced insurance adjusters. Once a claim is filed, the carrier will send out an adjuster to inspect the damage and document the claim. This includes using a program called Xactimate which assigns a price point to each damaged item. This program is what helps determine the estimate or initial payout.
Unlike Independent and Public Adjusters, carrier adjusters that are employed by carriers are not required to have any specific training or certifications that prove they know what they are doing. This leads to a phenomenal amount of mistakes, especially with complicated or large loss claims. Even small mistakes like missed items and inaccurate pricing can have a huge impact on the initial estimate of damages.
To get what is fairly owned, policyholders will have to request a reinspection of the damage or review of the estimate but many people will take what is initially offered by the carrier.
Why are unlicensed professionals allowed to adjust claims? Find out here.
2. Low Settlement Offers
Incorrect estimates are one of the main reasons settlement offers are less than they should be, but the incorrect interpretation of policy benefits is another huge factor.
How could insurance carriers not understand an insurance policy they sold?
Insurance policies are considered legal, binding contracts and are written in legal language that is well above a college reading level. Most policies also contain clauses and exclusions that make understanding coverage even harder for most people. How a policy is interpreted is a big factor in how fairly it is paid and often a reason property damage claim lawsuits have reached state Supreme Courts. It’s safe to assume that if inexperienced adjusters are working claims, the likelihood that policy coverage could also get missed and result in a low settlement offer.
If policyholders have two options when they receive a low settlement offer: attempt to negotiate the claim themselves or hire an expert.
Without experience, negotiating a claim is hard and the learning curve is steep. When combined with a devastating loss, most policyholders simply give in and accept the low settlement offer to begin the repair process.
Hiring an outside expert like a Public Adjuster or property damage attorney comes with its own set of challenges. While these experts are often needed to negotiate a fair payment, the costs are not covered. These “consequential damages” mean that policyholders are never made whole after a claim.
3. Claim Delays
Claim delays can happen for a number of reasons and are common after widespread weather events. Insurance carriers are often burdened by a huge influx in claims and problems trickle down to consumers. The most common delays include waiting on an adjuster to inspect the damage and waiting for claim payment – both of which are outside of a policyholder’s control.
Most states have laws that require insurance carriers to respond to and pay claims in a timely manner but how long varies. Even if carriers miss these deadlines there isn’t much policyholders can do other than wait or hire an attorney. In most states, failure to meet deadlines by itself doesn’t constitute as “bad faith”.
While not always malicious, the issues policyholders face when filing a claim are common and shine a spotlight on how hard it is for policyholders to receive a fair settlement. We believe several things can be done to improve this process including a universal adjuster license and compensation for policyholders who have to use third-party experts to fix carriers’ mistakes.
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