Home Insurance Cash Settlement

Policyholders naturally have a lot of questions when it comes to receiving a home insurance cash settlement. There are many instances where your cash settlement can be either compromised or circumvented altogether. The likelihood and size of your home insurance cash settlement depends on several factors:

  • The language within your home insurance policy
  • Options you agree to with the insurance adjuster
  • Oversights during the appraisal

How the Language in Your Home Insurance Policy Affects Your Cash Settlement

Home Insurance Cash SettlementThis first factor is a significant one because the rights your insurance company declares within your policy can affect how your damage claim is handled and even paid. One growing trend we’re seeing particularly in Florida is when insurance companies elect to handle the repairs in the event of a loss. Often times, the language within your insurance policy will give your insurance company the right to repair your damaged property, and your insurance company might be one that always elects to do so. This election will be stipulated in your homeowner’s policy.

If your insurance company elects to repair the damage to your home, this essentially means that instead of giving you a cash settlement so you can hire your own contractors and handle repairs at your own discretion, your insurance company is making the repair choices for you and then paying the repair and restoration companies directly. In other words, you don’t ever receive a bill, but you don’t receive a settlement check either. Instead, your insurance company handles all of the transactions.

You might be thinking, Well as long as the damage is being repaired, does it really matter if I receive a cash settlement and pay a restoration company myself or my insurance company does? Absolutely. If your insurance company has elected to handle your home repairs, you’ll have little say in 1) what is found and declared as damaged and 2) who’s going to repair the damage. What if a damaged item isn’t completely restored to your liking or damage that your insurance adjuster overlooks in the appraisal process causes complications down the road? You’re either stuck with the problem or forced to pay out of your own pocket for what should have been your insurance company’s responsibility to notice and fix.

So what can you do to ensure your insurance company sends you a cash settlement in the event that your home’s structure and/or property is damaged?

It depends. Again, if your insurance company is one that elects to make repairs, depending on the severity of your damage, a home insurance cash settlement advocate such as a public adjuster might not be able to get involved. At Insurance Claims Consultants, we welcome you to call us at any time so we can gather more details and provide guidance even if we can’t get directly involved. One action we might advise, for example, is contacting an attorney who can draft a letter to your insurance company, essentially reminding your insurance company that it has legal responsibilities to investigate and repair your damage. In other words, a “Dear, Insurance Company: You’re on the hook, so pay close attention because we are” type of warning.

By the way, if you’re reading this blog as a precautionary tale, do yourself a favor and examine your homeowner’s insurance policy closely. If your insurance company elects to repair within the policy, you might strongly consider shopping for coverage with a new insurance company so you’re entitled to a cash settlement in the event that damage occurs to your home.

How the Choices You Make at The Advice of Your Insurance Adjuster Can Affect Your Home Insurance Cash Settlement.

Assuming the language in your home insurance policy dictates that you do have the right to a cash settlement, agreeing to certain suggestions by your insurance adjuster can negatively impact the amount of your cash settlement.

During the appraisal process, your insurance adjuster (the one hired by your insurance company to examine the extent of your damage) may present you with the damage they’ve found and then recommend a restoration company or two that they’ve worked with in this past. This is a very tempting proposition for several reasons, mostly because you’re likely feeling very overwhelmed and would like to have your things repaired as soon as possible so you can move on with your life. We really do get it because we’ve worked with thousands of people in your similar situation. But before you agree to the recommendation, let’s examine a few important factors:

Insurance companies are in the business of making a profit just like everybody else. If they paid every claim the maximum limit, their profits would be dramatically affected. While they may be handling your claim because they’re required to legally, you’ll be hard-pressed to find an insurance adjuster who will make an exhaustive search to detect every possible crumb of damage. After all—the more damage he/she finds, the more your insurance company owes you. This is certainly not to suggest that your insurance adjuster is intentionally overlooking damage. But he/she is probably not looking closely for hidden damage, nor is he/she focused on full replacement of damaged items—even if it’s pretty obvious that they can’t be fully cleaned or restored. Unfortunately, it often comes down to a matter of minimizing what the insurance company owes you…even if it means saving just a few dollars at your expense.

If you choose to follow your insurance adjuster’s recommendations and work with one of their “preferred” restoration companies, you’re essentially relinquishing control in 1) what is being repaired versus replaced and 2) researching and choosing your own restoration company. By the way, few restoration companies, particularly those who have established relationships with insurance companies, are going to examine your damaged items and tell you they recommend total replacement instead. Why? They’d be out of business. We strongly suggest bypassing your insurance adjuster’s recommendation and researching your own restoration company, so you have more say and reassurance during the repair process.

Any time you agree to work with the home repair or restoration company that your insurance company recommends, your insurance company pays their bill. This means that if you are eligible for a cash settlement to cover things outside of this recommended repair, such as the cost to replace items that are beyond repair and/or reimbursement for living expenses if you must temporarily live elsewhere due to damage, your insurance company will deduct the amount of the restoration bill from your final settlement amount, giving you little control if something is not fully restored during this process or goes missing (very common).

Oversights During the Appraisal

Perhaps the single most important component to understand during the claims process is that the adjuster your insurance company sends to investigate your damage and come up with what is deemed a “fair” number is an employee of your insurance company. Even if he/she is an “independent” adjuster, this just means he/she is frequently contracted by your insurance company.  Make no mistake about it—there’s nothing “independent” about an insurance adjuster.

When you file a claim, your insurance company knows that they may have to send you a settlement, depending on the severity of your damage and the amount of your deductible. While they are legally required to review your claim and determine the extent of damage, there is basically no one following behind the insurance adjuster to make sure he/she is being as thorough in the investigation as possible. After all, the more thorough the appraisal, the more money your insurance company might have to pay you to repair, restore or replace the discovered damage. It just doesn’t make a lot of financial sense for the insurance company to perform what you’d call a painstaking examination.

Fortunately, you do have rights as a policyholder, and in many cases, it includes the right to hire your own adjuster, also known as a public adjuster. At Insurance Claims Consultants, we perform an independent investigation of your damage, including an exhaustive search for hidden damage and lost items you’ve probably overlooked but nevertheless require replacement. Once we reach our own independent conclusion, we negotiate with your home insurance company to attain the cash settlement you deserve. Because of the many rights you’re entitled to as a policyholder and may simply just not be aware of, we can get involved at any point during your claim. For example, we’ve had clients call us after they’ve already agreed to work with their insurance adjuster’s recommended restoration company; in many of these cases, we can immediately stop the restoration process and begin our own investigation and analysis of damage before further action is taken. In some cases, we’ve even helped our clients win more money after their claim was already closed. While the most optimal time to contact us is right from the beginning of the claims process, if you have a hunch that something isn’t right during any point in your home insurance claims process, give us a call at anytime. We are here 24/7 to answer your questions and immediately assist you in your claims process.

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