Insurance companies are built on a simple principle: they take your money, but they are not in a rush to pay you back if you are in need and have a claim. They accomplish the first part of this formula by demanding prompt payments of premiums and threatening that your coverage will lapse or be lost if you do not pay. The second part they do by using any and all means at their disposal to (1) deny you coverage; (2) minimize payments to you; and (3) delay, delay, delay the resolution of your claim. The third part of this works in favor of the insurance company because, even if they pay you the money that’s owed to you, the longer they hold on to your money, the more use they have of it, being able to use it, invest it, and get interest off of it. This is called the time-value of money.
A client once came to me with a problem—his insurance company denied that the insurance policy even existed because the company made a mistake in its internal records with respect to the client’s business address. It took a stern letter from me, accompanied by many pages of exhibits to persuade the insurance company that it was wrong on the coverage issue. Of course, the insurance company did not give up its games at that point. After the insurance company admitted that coverage existed, it offered to reimburse my client for little more than half of the actual water damage.
You have seen this time and time again with homeowners’ insurance, car insurance and even life insurance: the insurers will all do their best to deny you coverage or to make sure you get as little money as possible. Frequently, they do that by using deflated (low-ball) damage estimates. Sometimes, they use methods that are unethical or even illegal, and you may not know the difference unless you consult with an attorney.
Now, in the wake of many storms and several hurricanes that left many people with property damage, there will be many legitimate insurance claims. This terrifies the insurance companies. They will avoid you, make it difficult for you to make a claim, prove your claim, and get your money. Many insurance companies do not have good telephone support, especially after major disasters, and there is a reason for that—it costs insurance companies money and actually helps you further your claim. Why would they do such a thing?
You need to be prepared to fight the insurance companies. It is somewhat ironic that the insurance companies use slogans saying that they will back you up and protect you when they try to sign you up, but their attitude is radically different when they have to pay you, and you should expect it and be prepared for it. That means you have to take prompt action, document everything, and prepare persuasive evidence that will show your insurance company that you have a valid claim and are entitled to recover for your losses and damages. The bigger the claim, the more insurance companies will fight you over it.
With the storms and hurricanes, there will be some damage caused by winds and fallen trees, but most of the damage will be caused by water. Water damage is persistent, severe, and difficult to repair and clean up. This is the kind of claim you can expect the insurance companies to fight nail and tooth over. They will go over your policy with a fine tooth comb and look for gaps and ambiguities in coverage. It is important whether you have separate flood insurance or not. Typical homeowners’ insurance will not cover flood damage, but even with flood insurance you may have issues, such as timing of the claim (typically only 30 days). It may be important, for example, how water damage occurred or if there is more than one source of damage. Insurance companies have many adjusters on payroll to deny and reduce your coverage. You should have someone on your side too: a skilled attorney who will fight the insurance company for your rights.