Your Insurance Coverage and Loss Recovery
How do I start an insurance claim?
Notify your insurance carrier. Usually there is a central claims notification phone number to call. Then call your insurance agent to be sure he or she can follow up for you with the central office.
Most insurance policies require that you take all reasonable steps to prevent further loss. Your agent is also a good resource for helping you understand what you need to do to meet that requirement, as well as sort through the other details of coping with and restoring your loss.
What does my insurance cover?
If you have adequate coverage, your insurance should cover all fair and reasonable costs of restoring your property to pre-loss condition. If you have a deductible, your insurance will cover the full amount, less your deductible.
Insurance doesn’t cover unrelated damage or deterioration the property may have sustained prior to the insured loss.
Must I hire the restorer my insurance company recommends?
No. Your policy does not require you to use a contractor referred, approved or recommended by your insurance company.
Regardless of which contractor you use or how you located them, however, be sure they are reputable, fully licensed and insured. If you don’t, you could be liable for any injuries, damage or other issues on the job that result from the actions of the contractor.
This is true regardless of whether the insurance company recommended the firm. It is your property, so it is your responsibility. That’s why you, and no one else, should make the final decision on which restorer to use, and why you need to be sure you are comfortable with your choice.
Am I required to use the lowest bidder?
No. Your insurance policy should pay repair costs based on the prevailing rates in your area for like work completed to professional standards. In fact, most reputable restorers price their work based on insurance industry approved price schedules so price is typically a non-issue for the policyholder unless policy limits are being approached. Remember, your insurance company should pay all costs except your deductible. You could decide to choose the lowest bidder, or the highest, so long as the high rate is within the bounds of the prevailing rates.
The most important criterion is that you are comfortable that the contractor you choose will perform the restoration according to the proper Standard of Care to safely return your property to pre-loss condition.
Can my insurance company hire a firm to repair my house?
No. Only the property owner can authorize a company to work on the property. The insurance company can suggest or recommend contractors, but the insurer does not have the right to directly contract for work on your property, nor can they force you to use any particular contractor.
What quality of work am I entitled to?
You are entitled to restoration to pre-loss condition. Your insurance policy should cover materials and workmanship equivalent to the original. You should not suffer a loss in value because of the damage or the repairs. Likewise, you should not expect your insurance to restore the property to a better state than it was before.
Am I obligated to disclose the damage and repairs to a future buyer?
It depends on the laws in your state and the nature of the damage and repair. This is why it is so important to make sure the property is restored to pre-loss condition, in both materials and workmanship, and have the documentation to back that up. If you have the confidence that the work was done properly, and the documentation to prove it, you are protected from any issues, including potential liability, when you sell the property.
What should my contract include?
It should include a detailed listing of the repairs to be made, plus a listing of the types and quantities of materials to be used. It also should include an estimate of the time and labor costs to complete the repairs. You should never accept a contract with vague or “repair as necessary” specifications. The contract also should specify what is to be done if hidden damage is discovered and the procedures to be followed if the contractor feels additional charges are required during the course of the project.
Is a license required for insurance repairs?
Licensing requirements vary by state and locality. Local regulations governing construction and zoning may come into play in your area, as well. In addition, certain Federal regulations may apply to repairs, such as requirements for handling asbestos, lead and other hazardous materials. You should not work with any contractor not in compliance with all state, local and Federal licensing requirements. Any reputable, qualified contractor should be able to produce verification that they are in compliance.
How do I evaluate a restoration contractor?
Check with your local Better Business Bureau to see if there are any outstanding complaints against the firm. You also may want to check with your state’s licensing bureau to see if there are any outstanding issues or complaints against the firm.
Then, ask the contractor for at least three references to jobs currently being worked on and/or recently completed. Be sure to get both, as this will give you an idea not only of how it is to work with the contractor, but how the property owner feels about the completed job after some time has passed and they have had an opportunity to “live with it.”
Finally, see if the contractor has any association memberships, technical certifications or other credentials that would support claims of professionalism and expertise.
What if I disagree with the insurance company on the amount of the loss?
If you and the insurance company cannot come to a satisfactory agreement, you can ask for arbitration, also known as “appraisal”, as stipulated in your policy. Typically, policies clearly state the steps necessary to request and proceed through appraisal to settle disputes. Keep in mind that the insurance company also can request appraisal any time prior to the final settlement, even if you already have received some payments on the claim.
When can I expect payment from my insurance company?
The time by which your insurance company must provide payment is specified by your individual policy as well as by state insurance regulations. Generally, this is 30 to 60 days after you have submitted proof of loss per the requirements stated in the policy. Be aware that the policy also may place time limits on how quickly you must make the initial claim and provide other information which may be required or your claim may be denied. Make sure you understand what you responsibilities are, or you may find you have lost some or all of your benefit.
This information is provided as educational purposes only and is not intended to be taken as legal advice or represent specific coverages of any individual insurance policy.