There are worse things in life than death. Have you ever spent an evening with an insurance salesman?
Property Damage Insurance Claims
Texas Insurance Bad Faith
Texas won’t put up with insurance companies’ bad faith towards their own customers. The Texas Insurance Code establishes defines “unfair settlement practices,” or insurance bad faith, as:
- Misrepresenting to an insured customer a material fact or coverage policy provision;
- Conditioning payment of one chunk of a claim until the entire claim is resolved;
- Failing within 15 days of receipt of claim to:
- Acknowledge receipt of the claim;
- Commence any investigation of the claim; and
- Request from the policy holder everything the insurance company then believes will be required of the claimant.
- Conditioning payment of one chunk of a claim until the policy holder’s agreement to drop other portions of the claim;
- Trying to enforce a final release of a claim from an insured customer when the insurance company only made a partial payment;
- Failing to timely:
- Accept or deny coverage of a claim to a policyholder; or
- Submit a reservation of rights to a policyholder;
- Failing to give a policyholder a reasonable explanation for their denial of a claim or for the offer of a compromise settlement of a claim;
- Refusing, failing or delaying a settlement offer because other coverage may be available or that third parties are responsible for the lossess;
- Failing to attempt in good faith to bring about a prompt, and fair settlement of a claim;
- Refusing to pay a claim without conducting a reasonable investigation of the claim;
- Forcing a policyholder to file suit to recover an amount due under a policy by offering substantially less than the amount ultimately recovered in a suit brought by the policyholder;
Remember: your insurance policy is a contract. If your insurance company is not abiding by it, they are in breach of that contract. Their breach can be held to be bad faith and in violation of their duties to you — their client.
Texas law allowed for full compensation of your loss, plus attorney fees and costs, and often even a punitive damage award. Recent legislative changes have diminished these remedies to some extent on some specific property-damage claims.
The law is on your side. Your insurance company often is not. Do not trust them blindly.
Helpful Tips To File a Property Insurance Claim
Understand Your Policies and Coverage
The starting point should be learning what policies you have that may “cover” any damages to your property. Do you only have a dwelling-based policy? Do you have a separate policy for wind-damage, perhaps through the Texas Windstorm Insurance Program? Do you also have a National Flood Insurance Program (NFIP) backed policy through one of the carriers to protect against flooding? Report a claim to ever carrier under each policy that may apply.
Then find out how much coverage you might have and for what. You may have coverage for “living expense” to pay for lodging while your home is repaired. If your business was damaged, you may have coverage for lost revenue. Can you get a rental car? And for the purpose of repairs, you and your contractor must know how much is allotted to rebuild and repair.
If you have an agent, call them up. Or call the carrier itself to speak with a representative. Either way, read the policy! There is no substitute for educating yourself.
With this information, you can then do your best to maximize the total in your own pocket.
Report the Claim and Meet All Deadlines
Waste no time. Report the Claim ASAP to any carrier whose policy may cover the damage your property sustained. Many policies have strict timelines to report and for good reason. The carrier might wish to dispatch its adjuster to assess the damage while it is still fresh, or before secondary damage occurs (e.g. You do not need to wait to report a claim until you have all of the information. The claim can always be supplemented later with photos, reports, and an estimate for repair from your preferred contractors.
Then figure out all other deadlines that your policy might impose. Calendar them and never miss one. You do not want to give your carrier an excuse to reject your claim and blame you for it.
Inventory Damaged/Destroyed Contents
Your immediate impulse might be to throw out all of your ruined furniture onto the curb. But first, please inventory EVERY item that is destroyed. This is critical to later making your claim for reimbursement for each of these items. Pictures are good. A list with pictures is better.
You may then throw it all out. With adequate documentation of what was lost, a carrier or a future adjuster cannot demand or expect for a property-owner to save the damaged content. Similarly, a property owner need not have evidence of the original purchase.
Keep a Record of All Communications and Actions
Make sure that all your communications with the insurance company & contractors is IN WRITING. If you speak over the phone or meet with either, send a polite email after restating the important decisions, topics covered, or plans made.
Just as importantly, keep a journal/diary of all events, dates, actions, costs, decisions, etc. that occur. Write down notes alongside each of these events that will serve as a log of what occurred. This will be critical for multiple reasons, not least of which to help you stay organized. Should there ever be litigation later on in the process, this will make your lawyer’s job that much easier.
Find Yourself a Contractor and Perhaps Your Own Adjuster
It is critical that you find and work well with a contractor(s) that you trust. Ask for a referral. Check out Angie’s List or the Better Business Bureau. Ask for previous-customer references or even to see prior work. Your contractor will rebuild your home. You must be able to work with them as best as possible.
Similarly, there are private adjusters that will work for the property-owner rather than for the insurance companies. These are professionals that often have extensive experience working for the big carriers. They know the lingo and the factors necessary to help you maximize your claim. And they often can help process the claim far more efficiently than the actual policy owner. You must weigh out their cost (often a contingency fee of any money recovered) and what you hope to achieve from their involvement before committing.
Meeting the Adjuster
The adjuster can be your best friend, or biggest impediment to maximizing your claim. Some adjusters have all the experience in the industry, and will do you justice. Others have never held a hammer, but instead attended three days’ worth of a crash-course education. Yet, despite their zero experience in construction or even simple home maintenance, they are tasked with assessing the wide array of damage done to your property.
It is best to have your contractor there for the adjuster’s inspection. The hope is to assure that the adjuster sees the same damage as your contractor and concludes that your contractor’s list of recommended repairs (and price tag to do so) is accurate. If the adjuster reports to your carrier the same repairs recommended by your contractor, you’re doing great.
There may be more than one adjuster from the different carriers. And there may be a different one to assess your loss of contents.
After the Meeting
Remember Tip No. 4 above! After the adjuster leaves, send an email thanking him for his visit, and restating the key points/issues discussed and agreed upon (or the disagreements between you).
This contemporary, written log of what occurred, what was said and what was agreed upon will make it all the more difficult for either the adjuster to backtrack, or for the carrier to later disagree, deny, or under pay.
Then learn what will happen next and when and what is expected of you. Are you expected to take action? When will the carrier issue the first payment and for how much? Will the payment be made to you or your mortgage company? If the latter, then you will need to speak with your mortgagor.
Follow Up! Follow Up! Follow Up!
Do not expect this process to be on auto-pilot. And do not expect anyone besides you to care as much about your own property as you. Follow up with the adjusters, the contractors, the insurance representatives, etc. as needed. Do not drive them nuts. But remember the old adage: “the squeaky wheel gets the grease.”
Do Not Jump to Hire an Attorney
Read this article following the 2015 Memorial Day Flood in which I advise against hiring an attorney too soon into the claims process.
In it, I strongly advise policy-holders to avoid involving an attorney in their claim for as long as possible. A solid attorney with experience in “First-Party Insurance” litigation can best help once you are at the end of the line with your claim, yet still facing problems from your carrier (e.g. underpayment, non-payment, late payment, wrongful denial of coverage, etc.). But you must first live up to all your responsibilities.
Involving an attorney before the insurance company denies your claim, or underpays it or otherwise wrongs you ensures that a portion of the carrier’s eventual payment will go to the attorney, rather than towards your recovery.
But should your insurance carrier fail to live up to its commitments under the policy (which is a contract!), then you should immediately speak to an attorney. You should never accept anything less than 100 cents of every dollar you are owed (well… perhaps I’d advise you to accept 95ȼ or more of every dollar if that’s what you were offered).