How to Get Your Insurer to Pay Your Claims
Follow these steps to minimize hassles and get all the money you deserve.
Manuel Pulido returned to his townhouse in Chicago’s Gold Coast neighborhood one evening last December to find water spewing from the chandelier in his dining room. A pipe had burst in the second-floor bathroom, and the explosion of water quickly made its way into the master bedroom and leaked through to the dining room on the floor below. The ceilings, floors, walls, carpets, furniture (including some antiques) and light fixtures were drenched.
Pulido turned off the water and electricity and called his agent, who contacted Chubb, his insurance company. A water-remediation service arrived within 1½ hours to start drying out the damaged areas. The service spent five days in his house with giant fans and wet/dry vacuums to prevent further damage.
When Pulido and his wife, Rena, were shopping for insurance several years ago, they met with independent agent Rebecca Korach Woan, who gave them price quotes and discussed the pros and cons of several companies. They chose to pay extra for the Chubb policy because the company had a reputation for handling claims efficiently and taking care in repairing or replacing special items, such as antiques and artwork. The company had sent an appraiser to the house to itemize valuable property and take pictures of the items in every room.
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When the pipe burst, Chubb’s claims rep was able to access those “before” pictures. An adjuster came to see the damage and returned a few times with experts to check on special items, such as an antique table. By February, the Pulidos had received more than $200,000 from Chubb to cover the damage to their home and possessions. “I made one phone call and everyone followed up with me,” Pulido says.
Most insurance claims take more phone calls — sometimes many more. If you have a homeowners or an auto claim, here’s what you need to know to avoid hassles and get a fair payment from your insurance company.
Homeowners insurance
Andrea Johnson went for years without filing a homeowners insurance claim. Then on the afternoon of May 20, 2013, the sky went dark and a tornado with 200-mile-per-hour winds ripped through her town of Moore, Okla.
The tornado wiped out so many houses that she had a hard time finding her street when she returned. “The neighborhood behind ours was totally destroyed and was just debris,” she says. Only a few houses on her block were still standing. One side of her house was completely gone, “and my neighbor’s house was in my house.”
Act fast. When you file a claim that involves damage to your home, an adjuster usually comes within 24 to 48 hours, but it can take longer after a catastrophic event. Johnson contacted her State Farm agent after the tornado, and she met with the adjuster three days later to determine the extent of the damage. Johnson also contacted a builder who came to the site with an engineer and sent the insurer a report explaining why the house was unfixable. “The insurer finally decided it was a total loss,” she says.
Your insurer or agent may be able to help you find contractors, water-remediation services and other experts to help make the repairs, or you can use your own contractors. It can help to have your contractor at your house when you meet with the adjuster. “They can walk through together, and we can assure they’re both seeing the damage from the same perspective,” says Patrick Gee, senior vice president for auto and property claims at Travelers. The insurer may adjust the payout if the contractor finds more problems after starting the work.
Take inventory. Filing the claim for the contents of Johnson’s home ended up being complicated. By the time the adjuster arrived, she had little evidence of her missing possessions; many items had been scattered by the tornado, and some had been tossed by well-meaning volunteers who came to Moore to help homeowners remove debris. “They asked for page after page of information to tell them about everything — how many pairs of shoes, how long you had them, how much they cost. Who remembers that?” she says. Johnson wishes she had kept a home inventory or had taken pictures before the items were removed.
Keeping an updated inventory isn’t the tedious hassle that it used to be. Many insurers have home inventory apps you can use. “Take pictures of your rooms, closets, attic and your backyard,” says John Doak, Oklahoma’s insurance commissioner. Open drawers and cupboards so that the photos show all your possessions. Keep the photos and copies of receipts for valuable items outside of your home, with your insurance agent or online. If possible, have your insurance agent visit your home, take pictures and let you know if you’ve reached your policy limits, says Doak.
Know what’s covered. Most homeowners policies pay for additional living expenses — including rent, food and other costs — for up to a year while you’re unable to live in your home. Keep the receipts for reimbursement; some insurers provide debit cards for these expenses. State Farm paid Johnson’s rent for a small apartment while she waited for her claim to be settled.
In a disaster area, you may be out of your house a long time because of a shortage of contractors. “You could potentially be paid more for the additional living expenses than for the home if you’re out of your home for a year or more,” says Doak. Johnson decided to take the insurance money and move to Oklahoma City rather than rebuild her house.
Periodically review your policy or ask your agent what is and isn’t covered and how to fill the gaps. Flooding isn’t covered by homeowners insurance, but you can get a policy from the National Flood Insurance Program; your home-insurance agent may sell those policies. Sewage and drain backups usually aren’t covered automatically, but it may cost just $50 to add about $10,000 in coverage, says Rene Hernandez, an independent agent in Oklahoma City.
Most policies cover only about $5,000 worth of jewelry, but you can add a rider to provide coverage at the items’ appraised value.
How to fight back. If your insurer drags its feet or you don’t think you’re getting adequate reimbursement, you can get help from your state insurance department (find your state insurance department here). “If there’s an impasse, the insurance department can step in and speed things up,” says Doak, whose office fielded about 30,000 calls to help policyholders last year. The Oklahoma Insurance Department, like departments in many states, sets up a mobile office to answer consumers’ questions about their coverage and rights after a major disaster. It also offers a mediation program to help resolve disputes between homeowners and their insurance companies, an option that several state insurance departments offer.
Auto insurance
The steps you take immediately after a car accident can make a huge difference in how quickly and smoothly the claims process goes.
Gather evidence. You’re likely to have a smartphone camera with you when you drive; if not, keep a camera in the glove compartment. If you’re in an accident, start taking pictures as soon as it’s safe — of your car, the other car, the intersection, and the other driver’s license and insurance card. You may even want to take a photo of the other driver. Also keep a notebook and pen by the driver’s seat so you can jot down a license plate number quickly, says Sharon Jansma, who owns a Farmers Insurance agency in Visalia, Calif.
If there are witnesses, get their contact information. Having a police report can help, especially if there’s a question of who’s at fault. “Don’t tell anyone the accident was your fault, even if you think it was,” says Kip Diggs, a State Farm spokesman. “Don’t sign any document unless it’s for the police or your insurance agent.”
Some insurers, including State Farm and Travelers, have mobile apps that make it easy to submit photos and walk you through the next steps. Or you can call your insurance company or agent.
Find the right shop. You can usually use any body shop, but most insurers have preferred shops that work directly with the adjusters and guarantee their work. This can speed up the claims process, but it can help to have a second opinion. “I always tell my insureds to get a few estimates to make sure there’s consistency,” says Hernandez. If you have rental-car coverage, your insurer will pay for at least a portion of the cost of a rental car while yours is in the shop.
If the car is a total loss, the insurer will generally pay the car’s “actual cash value” (the market value for a car of its age and condition). Ask how the insurer came up with the number. Farmers compares the cost of cars selling in the area that are the same make and model, with similar mileage and upkeep, then adjusts the figure for your specific details. “I like to see a sample size of five to 10 cars selling in your area,” says Jansma. If you think the number is too low, gather your own list of similar cars for sale locally. The insurer will either send you a check for that value (minus your deductible) or pay the financing company and send you any additional money, if you have a loan.
Claims can get complicated — and take longer — when another car is involved. It usually takes 60 days or less, says Jana Schellin Foster, who owns an independent insurance agency in Carson City, Nev. “Anything beyond that, somebody is dropping the ball.” In that case, Foster will generally have a conference call with the agent, the insurer and the customer. “That way there is no miscommunication,” she says.
The final payment can be delayed while the two insurers decide who is at fault. A typical scenario: Your insurer pays the claim while you pay your deductible, even if there’s a good chance you weren’t at fault. Your deductible could be returned to you months later, after the insurance companies determine who is to blame. That process, called subrogation, can take anywhere from 10 days to a year, says Jansma.
How to fight back. If the insurer seems to be lowballing the repair costs, ask your body shop to provide a detailed estimate of what needs to be fixed. If that doesn’t help, find out if you have an “appraisal clause” in the policy, under which a third party reviews your body shop’s appraisal and the insurer’s and settles on a number.
Your agent may be able to help with stalled claims. “You may have one claim in a lifetime, but we do this every day,” says Sarah Brown, of Keller-Brown Insurance Services, in Shrewsbury, Pa. As an independent agent, she often has contacts at the other driver’s insurance company as well as at her client’s and can find out what’s causing the delay. The state insurance department can also explain your rights and get the insurance companies moving.
Check an insurer’s complaint record
One way to minimize the chances of having claims problems is to avoid insurers that have a history of hassling people at claim time. You can look up the insurer’s complaint record with the National Association of Insurance Commissioners’ Consumer Information Source.
Type in the company’s name, then click on “property/casualty” for the business type for auto and homeowners insurers. When you see the list of companies, click on “closed complaints,” then select “closed complaint ratio report.”
You’ll see a ratio of the insurer’s market share of resolved complaints to the company’s market share of premiums for that type of insurance (so larger insurers aren’t penalized for having more complaints). The national median is 1.00; companies with ratios below that median have a better track record than those above the median.
You can also contact your state insurance insurance department to learn about any actions taken against the insurer.
Check an Insurer's Complaint Record
One way to minimize the chances of having claims problems is to avoid insurers that have a history of hassling people at claim time. You can look up the insurer’s complaint record with the National Association of Insurance Commissioners’ Consumer Information Source.
Type in the company’s name, then click on “property/casualty” for the business type for auto and homeowners insurers. When you see the list of companies, click on “closed complaints,” then select “closed complaint ratio report.”
You’ll see a ratio of the insurer’s market share of resolved complaints to the company’s market share of premiums for that type of insurance (so larger insurers aren’t penalized for having more complaints). The national median is 1.00; companies with ratios below that median have a better track record than those above the median.
You can also contact your state insurance department to learn about any actions taken against the insurer.
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As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.