Property Damage

Insurance serves a very important purpose. It provides essential financial aid for damage caused by accidents and emergencies. Unfortunately, there are times when even the most reputable insurance company will do all they can to deny a fair and reasonable claim. For the individuals counting on that money to repair a home or vehicle after theft, vandalism, or other damage, a denied claim can be devastating.

Like other types of businesses, insurance companies are bound to a clear set of rules and standards that are designed to protect the consumer. Violations of California Insurance Code are serious and can be a significant liability for an insurance company. Insurance lawyers work to challenge denied claims and hold companies accountable when they fail to provide the services agreed upon with their policyholder. The following are common types of insurance claims and what to do if your coverage is denied.

Fire Damage

In 2018, a wildfire caused by a local power company overtook the entire town of Paradise in just 12 hours. Lives and homes were lost and the effort to rebuild and recover will likely continue for years to come. It is not only wildfires that cause these tragic losses. Even a small house fire can cause devastating damage to life and property. While nothing can replace family photos and heirlooms, an insurance settlement can help you rebuild your home so you can move forward after a fire.

Mudslides

In 2018, California Insurance Code was amended to include a bill that requires insurance companies provide coverage when loss or damage is the result of a combination of perils when one of which is a, landslide mudslide, mudflow, or debris flow. This is important because data shows a clear causal link between wildfires and ensuing mudslides.

As fires burn plants and trees, the soil loosens and shifts. Without vegetation, there is nothing to slow the flow of rain, further increasing the chance of a powerful mudslide. Prior to the change in insurance law, mudslide damages were not considered a covered peril, but coverage is now possible when fires or other perils are involved.

Water Leaks

According to insurance industry research, 37 percent of homeowners will experience losses due to water damage at some point, with the average insurance claim coming in at around $7,000. A broken pipe can cause structural damage reaching thousands of dollars. A water leak can also cause toxic mold, which makes a home inhabitable. Talk to your property damage lawyer to find out what your claim covers and what you can do if coverage for water damage is denied.

Wind Damage

High winds can reach up to 33 miles per hour, leaving significant damage to infrastructure, vegetation, and structures in their wake. Wind can uproot trees, overturn fences, and rip roofs and siding clear off buildings. Not only are these repairs costly, but you may not be able to occupy your home while they are being completed. Most insurance policies cover wind damage, but the terms regarding these losses can be confusing or unclear.

Theft and Vandalism

Generally, thefts and acts of vandalism are covered by most insurance policies. Yet, it is essential that a homeowner who has been robbed or vandalized file a police report at the time of the crime. Proof of ownership also needs to be shown, like a receipt for the purchase of the stolen items. Whenever you take out a new insurance policy, it is always a good idea to inventory valuables covered under the policy to save you time and effort in the unfortunate event you are robbed. If you have been vandalized, you should be covered as well, provided your home or business was not vacant for an extended period at the time the incident occurred. Your attorney can assist you in adding a vacancy clause if you are insuring a property you do not reside in.

Loss of Use Coverage

Coverage is also available to provide for shelter if your home is unlivable due to fire, water, or wind damage. Depending on the extent of the damage, you may need to find a place to live for weeks or months at a time while your home is repaired or rebuilt. Loss of use coverage is folded into your regular homeowner’s coverage and covers the following expenses to help you maintain a familiar standard of living:

• Moving costs
• Pet boarding costs
• Temporary housing at a motel, hotel, or rental property
• Groceries and dining out above and beyond your normal costs
• Laundry costs if you do not have access to a washer and dryer

If it costs you more to commute to your temporary home or park there, these costs may be covered as well. Your insurance policy should include the detailed expenses included in loss of use coverage.

Common Reasons for a Denied Claim

It is hardly uncommon for an insurance company to deny your claim for coverage. They may use a variety of excuses to avoid paying out, claiming:

• The policyholder missed a payment
• The policyholder failed to update the policy
• The policyholder misrepresented details on the policy application
• The location or type of accident is not covered
• The person or agent who caused the accident is not covered

Claims can also be delayed or minimized, costing you more time and money while you wait for necessary repairs to move back into your home.

Insurance Bad Faith

It is understood that insurance companies are at an advantage over policyholders in terms of knowing the ins and outs of various types of claims and what is and what is not covered by homeowners’ insurance. For that reason, the law expects insurance providers to act in good faith by investigating, processing, and paying out claims fairly and reasonably.

If you feel your claim is being handled in a way that violates good faith, you should consider filing a lawsuit against your insurance company. While the legal definition of good faith varies slightly by state, a good faith legal claim against an insurance company is generally required to prove two elements:

• Insurance benefits due according to the policy were withheld: You must prove your claim was valid under the terms of your policy and that your claim was denied.
• Reason for the withholding was unreasonable: In California, the Judicial Council of California provides civil jury members a list of factors to consider when determining if an insurer acted in bad faith. They include misrepresenting insurance policy facts or guidelines, failing to act on a claim in a timely manner, and failing to offer a reasonable explanation as to why a claim was denied.

What to Do If Your Insurance Adjuster Denies Coverage

After a fire, water leak, or other disaster, it is natural to feel scared and worried about the outcome, especially if you lost personal items and cannot return to your home until repairs are complete. The worry of being displaced is only compounded by the stress of finding out the insurance benefits you are counting on to rebuild are not guaranteed. If your insurance claim is denied, remember these tips to stay calm and achieve a positive outcome and the settlement you deserve:

• Do not panic: A denied claim is not the end. You have options to fight for the financial aid you deserve as a policyholder in good standing.

Ask for an explanation: Ask your adjuster to explain in writing why the insurance company opted to deny coverage and include the specific policy provisions that justify a denial. If they refuse, document this refusal in your own letter. It is important to document this unwillingness to cooperate if you decide to take legal action in the future.

• Consult an insurance lawyer: Once the insurance company understands you are not going to give up pursuing your claim, they may be more willing to negotiate.

It is understandable to feel vulnerable when dealing with a large insurance company, especially if you suffered significant property damage. Remember that as a policyholder, you have the right to expect your insurance provider to act in good faith by paying out your claim. If your adjuster will not acknowledge your claim, is dragging their feet on it, or is offering to settle for less than your claim allows, it is time to talk to a lawyer.