Most homeowners would assume that when they purchase insurance for their home, they know exactly what kind of coverage they have and what they can expect to receive in the event of an emergency or a disaster. Unfortunately, many of them are wrong. In the past twenty years, insurance companies have resorted to increasingly insidious tactics to avoid paying policyholders for the full value of their damaged property, leaving homeowners high and dry when it comes time to rebuild. How are insurance companies doing this, and how can you be sure your coverage serves as more than just padding for the company’s bottom line?
1) Rigged Computer Estimation Programs
The insurance claims process, like many other aspects of the insurance industry, has become increasing formulaic and technology-based. While this makes a world of difference in terms of efficiency, many times the algorithms used by these computer programs can be unclear and leave policyholders in the dark about where the dollar amount of their payout comes from.
Originally, the goal of these computer programs was to standardize payouts among similar injuries or property damages. However, many insurance companies have found ways to ‘tweak’ the programs to pay out significantly less than what people really deserve for their claims. Computer programs such as Colossus and Xactimate can be easily manipulated by insurance companies to ensure a payout that favors the interest of the insurance companies rather than claimants. This helps insure significant profits for insurance companies while leaving customers struggling to get back on their feet after a major disaster or injury.
2) Delaying Payouts
Another way insurance companies try to get around making fair settlements is by delaying payments as long as possible. While those making small claims often receive their payment quickly, people seeking larger settlements are likely to experience significant delays and postponements.
While many states mandate that insurance companies must respond to initial claims within a set period of time, if the insurance company decides it needs more time to investigate a claim or if the initial offer is disputed by the policyholder, insurance companies can keep delaying payment for as long as they see fit – even indefinitely. During the 2003 Southern California fires alone, there were 676 formal complaints filed about insurers offering payouts that were far lower than actual damage costs and delayed claims payments.
By delaying payments and making claimants jump through hoops when they are at their most vulnerable insurance companies encourage policyholders to accept their lowball payouts, especially if the company starts refusing to cove things like cost of living expenses in the interim. Some people may eventually be forced to accept what they can get, while others simply get tired of fighting with the insurer or don’t want the financial risks associated with going to court.
3) Retroactively Changing Policies and Coverage
Many insurance holders may make a claim only to find that their coverage has mysteriously changed. While companies are usually required to notify policyholders of existing coverage changes, miscommunications can keep homeowners from realizing that their “full coverage” isn’t quite so “full” anymore. While policyholders can try and fight these changes, loopholes and overly-complex insurance laws make these cases very difficult to win and many times the process is so arduous that claimants choose to simply accept the original offer.
What Can You Do To Stay Safe?
The best defense is a good offense, so it’s always a good idea to have a third party check out your insurance coverage before disaster strikes. Unfortunately, many people don’t give a second thought to their insurance until they need it and many times they may feel it is too late to do anything but accept their sub-standard settlement.
However, claimants often do have options they can pursue to receive a fair payout, such as hiring an insurance adjuster. Public adjusters, also known as claims adjusters, can examine your existing policy to see if your payout was in fact substandard. If they believe there is a discrepancy, a public adjuster can evaluate and record damages and fair compensation based on your losses and existing insurance policy.
A public adjuster can act as your representative to your insurance company and if they feel your settlement isn’t fair, they can renegotiate the claim in an attempt to seek higher payment. Since public adjusters are not affiliated with the insurance companies, they’re more likely to seek the remediation that is the most fair for the policy holder instead of the insurer’s bottom line.
If you feel that you’ve been given an unfair payout by your insurance company, companies such as Claims Mate and other public adjusters can help you receive the settlement you need to get back on your feet. Don’t feel like you’re at the mercy of big-wig insurance companies; with a little help, it is possible to get what is owed to you.