Approximately 85 percent of homeowners have property insurance. Of those with coverage, about 6 percent of homeowners make an insurance claim each year. And more than 98 percent of those claims involve some sort of property damage or theft. When you file a homeowner’s insurance claim for damage, the hope is that the insurer will provide enough to cover the cost of repairs. However, that doesn’t always happen. Sometimes, the home insurance adjuster estimate is too low.
The Role of the Home Insurance Adjuster
A home insurance adjuster’s job is to exam your property and estimate what the insurance company needs to pay out. This involves the creation of an estimate – a formal overview of the damage. Also, you get an outline of what needs to be repaired and what the adjuster believes each of those fixes will cost.
The adjuster may be an employer of the insurer. However, it is also possible that they are an employee of a third party. Not all insurers have adjusters available in every region. They essentially contract that task out to a specialty business.
While most homeowners would assume that the estimate will be an accurate reflection of the repair costs, that isn’t always the case. Sometimes, the amount listed by the adjuster is far below what they actual expense for the fixes would be. This leaves homeowners in a difficult position.
If you receive a home insurance adjuster estimate that is too low, here’s what you need to do.
Understand Your Coverage
Before you approach your insurance company about the amount on the estimate, you need to understand how your homeowner’s insurance coverage is set up. Your policy may work one of two ways.
First, it could cover you for the full cost of the replacement regardless of whether the damaged areas have aged. Often, this means your insurance company will handle your claim based on the amount it takes to do the work, buy the needed supplies in today’s market, and address any associated sales tax.
However, there can be exceptions even if you have this level of coverage. For instance, if you have a wooden fence that was in incredibly poor shape and clearly needed repairs before the incident-related damage occurred, you might not be eligible for full replacement cost in that instance.
Second, your insurer could factor in depreciation, paying only for the value of the damaged items before the incident occurred. For example, if your windows are broken due to heat from a fire, your insurance company would examine the age of the windows to see how much their value has changed since they were originally installed. If your windows are older, you may receive less money from your claim than it would typically cost to install new windows based on the depreciated value of the existing windows.
Knowing how your coverage works before you address the adjuster’s estimate is wise. That way, you understand whether you are covered for full replacement or if depreciation is a factor. If you are in the latter group, you may be stuck with a lower estimate because that is how your policy works, but it can still be worth it to seek an adjustment. However, if you are in the former, pursuing an adjustment should definitely be on your to-do list.
Speak with Your Insurance Company
If you believe the home insurance adjuster’s estimate was too low, you need to contact your insurance company, not the adjuster specifically. Have them walk you through the estimate, explaining why the adjuster listed various costs. Then, ask about the procedure for getting the amount adjusted.
The goal is to learn about your insurer’s process, as each company may handle it slightly differently. However, there are typically similar requirements, as will be discussed below.
Gather Quotes from Contractors
In nearly all cases, you’ll need to prove that the home insurance adjuster’s estimate was too low. Often, the easiest way to do that is to gather quotes from several reputable companies regarding the work that needs to be done.
Research companies in your area that could handle the type of repairs involved with your claim. Use sites like Yelp, Angie’s List, and Home Advisor to read reviews before reaching out. That way, you can make sure the company is likely to provide a fair quote, offers good customer services, and has former customers who are happy.
After you find some suitable companies, contact at least three, and request a free estimate. By having multiple quotes, you are able to build a case that demonstrates that the adjuster’s estimate was too low. Additionally, you are being diligent about confirming your assumption that the adjuster’s estimate was, in fact, inappropriate.
Consider an Independent Adjuster
Just as your insurance company may hire a third-party adjuster to examine the damage, you can too. Hiring an independent adjuster can accomplish the same goal as getting quotes from contractors. However, you won’t be able to secure this service for free.
Often, an independent adjuster will charge between $200 and $500 to provide an estimate. If the discrepancy between the original amount and the cost of repairs is less than what you would need to pay for an independent assessment, this likely isn’t worth pursuing. But, if the difference is substantial, it is a path you can choose to take.
Provide the Evidence to your Insurer
Once you have quotes from contractors and/or an independent adjuster estimate, contact your insurer again. Submit the documents for the insurer to review and see if they will make an adjustment.
As long as the contractor quotes only relate to damage from the incident and the companies are reputable, there is a solid chance your insurer will settle your claim for a higher amount. However, if they don’t, you still have one more course of action.
File a Formal Complaint
If you genuinely feel that you are being mistreated by your insurer, you do have the option of filing a complaint with your state insurance department. That department would conduct an investigation and provide you with guidance regarding how they think you should proceed.
In some cases, the state insurance department will reach out to your insurer on your behalf if they feel your complaint is justified. When this occurs, they try to encourage the insurance company to reach a fair resolution.
Hire An Attorney
At times, the department may recommend you hire an attorney. However, they will not assist with that cost, so you would be responsible for paying any associated fees. Usually, this is only worth pursuing if the difference between the adjuster’s estimate and the contactor quotes or independent adjuster’s estimate is substantial. If the disparity is too small, you may end up losing money on the claim overall when you pay your attorney.
Ultimately, disputing a home insurance adjuster’s estimate can be a bit of a cumbersome task, but it is worth doing to the estimate is significantly too low to repair the damage. Just make sure you understand your coverage and insurer’s process before you begin. Otherwise, you may spend a significant amount of time fighting for an amount that you would never receive.
Have you ever had to get an insurance estimate adjusted after learning the actual cost? Share your experience in the comments below.
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