Does Insurance Provide Emotional Compensation After a Property Damage Claim?

Typically, a property insurance claim does not include compensation for emotional distress.

However, in certain situations you may be able to recover emotional damages from your insurer via a lawsuit.

Most liability policies also cover emotional distress under physical injury coverage.

Find out everything you need to know about emotional distress and property damage claims.

What is Emotional Distress?

Emotional distress is a broad term for mental suffering that occurs during or after an event.

Typically, emotional distress plays a role in personal injury law. If you have been injured as a result of another person’s actions, then you may be owed compensation for emotional distress.

People experience emotional distress in different ways, including:

• Anxiety
• Depression
• Insomnia
• PTSD
• Other emotional and psychological symptoms

Some experience signs of emotional distress immediately after an event. With others, it could take months for symptoms to occur.

Emotional Compensation is Unlikely in Property Insurance Claims

Typically, emotional distress is not recoverable in property insurance claims.

A normal homeowners insurance claim, for example, covers the cost of repairing your property to pre-loss condition. If a hurricane damaged your roof and it costs $15,000 to repair that damage, for example, then your insurance should pay $15,000 to cover the damage, minus your deductible.

Even if a property claim left you traumatized, you’re unlikely to receive compensation for that trauma. Property insurance covers the cost of repairing your property – not the physical or emotional injuries experienced by the people within the home.

However, in some cases there are ways to recover emotional distress damages – say, via a lawsuit or a liability claim.

You Could Receive Emotional Compensation in a Lawsuit

It is possible to receive emotional compensation from your insurer via a lawsuit.

If you believe your insurer violated the terms of your insurance contract, you may have options to pursue a resolution, which may include legal action. In some situations it may be possible to seek consequential and punitive damages via a lawsuit.

Imagine your insurer delays handling your claim, doesn’t properly investigate, or denies it without reasonable cause, even though the claim is valid. In cases like this, if it’s proven that the insurer acted improperly, there may be grounds to seek compensation beyond the original claim amount. This type of compensation typically comes from legal action against the insurer, not from the insurance claim itself. Emotional distress may be one form of damage considered in such cases.

How Homeowners Liability Insurance Covers Emotional Distress

A standard homeowners insurance property includes dwelling coverage and liability insurance.

Liability insurance covers damages that occur to other people on your property – say, if a neighbor slips on an icy path when walking up to your house.

Depending on the situation, your insurer could cover emotional distress linked to a liability insurance claim:

• A standard homeowners insurance policy specifically defines bodily harm and injury.
• In most states, emotional distress is considered part of bodily harm. If someone is harmed on your property, then that person could be owed compensation to cover their physical and emotional damages.
• Most states define bodily injury as being “injury, sickness, or disease,” for example, along with “mental anguish, mental injury, disability, shock, or fright” arising out of the incident.
• Most states require a physical injury to occur before emotional distress can be claimed.
• A small number of states, however, cover emotional distress for a purely mental injury.
• In other states, however, it’s rare for emotional distress to be included on a liability insurance claim under homeowners insurance coverage.

Commercial Liability Insurance May Cover Emotional Distress

If you have a business owner’s policy (BOP), then you have a standard package of coverages to protect your business – including the property of the business and liability linked to that business.

Bodily injury coverage is part of that coverage. Bodily injury coverage could cover injury, sickness, disease, and death. It could also cover emotional and mental injuries – including emotional distress or PTSD linked to the workplace.

A standard BOP liability plan also covers medical expenses. Those medical expenses could include treatment for physical injuries – like medical bills from a hospital. Medical expenses may also include psychological treatment – say, at a psychiatric facility.

Final Word

Emotional distress is not part of an ordinary property damage insurance claim.

In some situations, an insurer may be required to pay compensation for emotional distress through a lawsuit, such as when it’s found to have violated the terms of the insurance contract.

Similarly, your liability insurance could cover emotional distress via bodily injury coverage. Most states define “bodily injuries” as physical injuries and emotional damages that arise from those physical injuries, which could allow you to receive compensation for emotional distress via a liability claim.

If you believe you’re owed compensation for emotional distress linked to an insurance claim, consider contacting an attorney.

Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.