Home Insurance: Am I Underinsured? How to Avoid Being Underinsured

Some people have too much insurance coverage. They’re over-insured. Others have too little coverage: they’re under-insured.

Are you underinsured? Are you carrying too little insurance for your assets? Is your home sufficiently protected by insurance? Are you exposed to too much risk?

Right here, we’re explaining everything you need to know about being underinsured, including how to avoid being underinsured.

Is My Home Underinsured?

Most homes in the United States are underinsured. Nationwide estimates suggest that approximately two thirds of American homes have too little insurance.

Some homes are underinsured by 60% or more. The average home is underinsured by about 20%.

What does being underinsured mean? Being underinsured means you don’t have enough home insurance to protect your home if it’s damaged or destroyed.

If you don’t have enough home insurance, then you are personally responsible for paying a significant amount of home repair or replacement costs after a disaster.

Let’s say your home and all the possessions inside your home are worth around $500,000. Your home, however, is underinsured by 25%, which means you have $375,000 of insurance coverage. A fire burns down your home and everything inside it. It’s going to cost $500,000 to rebuild your home and replace all of the possessions inside. Your home insurance covers $375,000 of that cost, while you need to pay the remaining expenses out of pocket. If you don’t have an extra $125,000 of cash available, then this could be a big problem.

Be aware of a Coinsurance Clause that may be on your home insurance policy. These typically state that you need at least 80% coverage of the home's total value to avoid any insurance claim settlements being reduced by the percentage that you are underinsured.

How to Avoid Being Underinsured: Top 12 Ways to Avoid Being Underinsured Checklist

Want to avoid being underinsured? Here’s a checklist to ensure you have sufficient coverage.

1. Exceed Minimum Insurance Requirements

Under the terms of your mortgage, your lender will require you to have a certain minimum amount of homeowners’ insurance coverage. This minimum amount should be at least equal to the balance remaining on your mortgage, although it could be higher to cover the replacement costs of your home.

The minimum liability protection you can get for a homeowners’ insurance policy is typically $100,000. Most experts, however, recommend having at least three times that.

If you’re just meeting the minimum insurance requirements set by your insurance company, then you may not be fully protected.

2. Avoid Reducing Coverage and Find Other Ways to Save

You can cut all types of bonus coverage from your home insurance policy to save a few hundred dollars per month. However, it’s often better to save costs in other ways.

Instead of reducing coverage, for example, you may want to raise your deductible. Raising your deductible from $500 to $2,000 can save you $300 per year or more.
Or, bundle your home and auto insurance policies with the same company. Bundling can save 20% per year or more off your home and auto insurance.

3. Update your Policy After New Renovations

Remodeling projects can raise the value of your home by 25%. Unfortunately, many homeowners fail to notify their insurance company after renovations are complete.

This is a problem. After renovating your kitchen and basement, your home may be worth $50,000 more. Your home insurance policy, however, still reflects the original value of your home.

Whether you added a deck, finished a basement, or performed any other renovations on your home, it’s crucial that you update your insurance policy.

Updating your home after renovations is important for more than just personal property replacement. It’s also important for liability coverage. If you added a trampoline or deck to your backyard, for example, and a guest injures themselves on it, then your home insurance may not cover your liability.

4. Take a Photo of Every Room in your Home Once Per Year

Some insurance experts recommend setting aside a certain day every year – say, February 1 – to take a photo of every room in your home.

It’s an easy way to document your possessions and property. In the event of a major loss, you have visual evidence of what your home looked like and what was in your home.

When you make a total loss insurance claim, you’ll want as much evidence to support your claim as possible. Your insurance company will require you to make an inventory of all your lost possessions and their approximate value, for example.

5. Keep a Personal Property Inventory

Your homeowner’s insurance covers your personal property. To make sure everything of value is covered, you should maintain an inventory of your personal property.

Coverage limits for personal property are typically set as a percentage of the policy limit for your home. It’s typically around 60 to 70%. If your home insurance covers $500,000, for example, then you can claim up to $300,000 to $350,000 for your personal property.

Maintaining an inventory of your personal property is one of the best ways to avoid being underinsured. You can see exactly how much your possessions are worth, then get adequate home insurance to cover those possessions.

6. Add Endorsements for Personal Property Exceeding a Certain Amount

Not all personal property is covered by your homeowners’ insurance. If a single personal property item exceeds a certain amount (typically around $2,500), then you may need to add a special rider or endorsement to your policy.

Guns, coin collections, jewelry, art, antiques, and other items are some of the most common personal property endorsements.

7. Assess Your Endorsements and Exclusions

After considering all of the items above, it’s crucial to review your exclusions and endorsements. These are the parts of your policy that either add coverage (endorsements) or remove coverage (exclusions).

We explained personal property endorsements above. You’ll want to add endorsements for any expensive personal possessions.

However, you can also add other endorsements to your home insurance policy to cover certain items. Depending on your insurance needs, you may want to add these endorsements to your policy to avoid being underinsured.

Common Endorsements To Consider Adding

Endorsements add coverage to your home insurance policy in various ways:

• Sewer and Sump Pump Backup: Sewer and sump pump backup claims are some of the most common types of homeowners’ insurance claims, and they’re almost always excluded from standard policies. An average claim costs $15,000. The endorsement should only cost a few dollars per month.
• Special Personal Property Coverage: Your personal property may be covered from named perils – like lightning, fire, or water damage. However, it may not be covered from other perils – your TV may not be covered from power surges, for example. Consider adding special personal property coverage to avoid being underinsured.
• Home-Based Business Coverage: If you have a home office, then your office equipment and property may not be covered.

Common Exclusions To Evaluate

Some insurance companies exclude certain items, while others do not. If you own  “dangerous” breed of dog, for example, then some home insurance policies will exclude any liability from these certain breeds.

• Wind and Hail Damage: Depending on your state, wind and hail damage may be excluded from your home insurance policy. If you live in a windy, hail-prone state, for example, then you may need to pay extra to add wind and hail damage coverage to your insurance policy. Check your home insurance policy to verify any exclusions for wind and hail damage. Otherwise, you risk being underinsured.
• Dog Breed Liability Coverage: Certain home insurance policies exclude liability for any damage caused by “dangerous” dog breeds. This exclusion has become increasingly common in recent years. Some insurers, including Liberty Mutual, Nationwide, and Amica, do not discriminate based on dog breed (although they will evaluate your dog based on its history and behavior). Additionally, some states, including Maryland, Pennsylvania, and Michigan, prevent insurers from denying coverage to homeowners based on a specific dog breed (although insurers are allowed to charge higher premiums).

8. Consider Buying Replacement Coverage and Check It Against Inflation

There are two broad types of home insurance coverage: actual cash value (ACV) coverage and replacement coverage. ACV coverage is always cheaper because it covers the depreciated value of your home or contents. Replacement value is more expensive because it covers the cost of actually replacing your home and contents.

That’s an important difference. Unfortunately, many homeowners don’t understand this difference until it’s too late. Having ACV coverage instead of replacement coverage can leave you dangerously underinsured.

Let’s say you have a 50-year old home. Your home is destroyed in a house fire. The cost of building a home has risen significantly over the last 50 years. However, your home insurance only pays you the depreciated value of your 50-year old home and contents. You might get a $100,000 payout, for example, when it costs about $450,000 to build an equivalent home today.

Consider buying replacement coverage, then check that coverage against inflation. Research how much new homes in your area cost. If you lost your home and received a payout from your insurance company, would it be enough to cover an adequate replacement home?

If not, you may want to adjust your insurance to avoid being uninsured.

9. Assess your Liability Coverage

Liability coverage is a crucial component of home insurance. Liability coverage helps with property damage, medical bills, pain and suffering, lost wages, and other damages incurred by individuals injured on your property.

If someone slips and falls walking up to your property, for example, or if your dog bites someone, then your home insurance liability coverage can protect you.

Liability limits typically range from $100,000 to $500,000. Most insurance experts recommend having approximately $300,000 of liability coverage.

Increasing your liability coverage is surprisingly affordable. It may only cost $2 to $4 extra per month to raise your liability coverage to $500,000, for example.

10. Consider Flood Insurance

Standard home insurance policies do not cover flood damage. However, it may be in your best interest to buy flood insurance even if you don’t live in a flood zone. You can view flood zones for any location on FEMA's Flood Map Service Center.

The only way to buy flood insurance in the United States is to get it through FEMA’s National Flood Insurance Program (NFIP) or an insurance company that works with the NFIP.

Approximately 1 in 5 flood insurance claims come from areas considered low-to-moderate risk flood zones. If you live near a body of water, or if you are at or near sea level, then flood insurance could be a smart investment.

11. Consider Umbrella Coverage

One final checklist item to avoid being underinsured is to consider your umbrella coverage. An umbrella policy can provide up to $5 million of liability coverage to protect your assets from being seized in a lawsuit. If you have significant assets, then umbrella coverage is crucial.

12. Review your Home Insurance Policy Every Year

Many homeowners treat their home insurance policy as a ‘set it and forget it’ item. They’ve bought home insurance. They pay their premiums. They never check it or compare home insurance policies again.

Instead, it’s important to review your home insurance policy every year. Check to make sure you have sufficient insurance coverage. Go through all of the checklist items above. Ensure you have the right amount of home insurance.

Plan Today To Avoid Dismay If You Have An Insurance Claim

Many homeowners don’t realize they’re underinsured until it’s too late. Don’t make this mistake and wait to find out when you are dealing with a large loss insurance claim.

Check to make sure you have enough insurance on your property. It’s a simple process that could make a life-changing difference when you need insurance the most.

Read More Here: Home Insurance: Am I Underinsured? How to Avoid Being Underinsured

Business Owners Policy: Everything You Need to Know About BOPs & How They Work

A business owners policy (BOP) is a package policy for small businesses. That ‘package’ includes both commercial property and general liability insurance.

Insurance companies that cater to small businesses will offer a BOP. Generally, small businesses must meet certain requirements to qualify for a BOP – like work in certain industries or be under a certain size.

Today, we’re explaining everything you need to know about a business owners policy (BOP), including what you need to know about BOPs, how they work, and how to find the right BOP for your unique needs.

What is a Business Owners Policy?

Many major insurance companies offer business owners policies (BOPs) to small businesses. A BOP is a package of multiple insurance products consisting of two core components:

• Commercial Property Coverage
• General Liability Coverage

Some insurers issue business owners policies on standard Insurance Services Office (ISO) forms, while other insurers use their own proprietary forms.

A standard BOP consists of a declarations page, a BOP form, a common conditions section, and one or more endorsements.

Pros and Cons of a Business Owners Policy

Many small businesses already have commercial property coverage and general liability insurance. Why does a small business need a business owners policy?

A BOP delivers two crucial benefits to small businesses: coverage and price. At the same time, a BOP comes with certain disadvantages – like a lack of flexibility.

Pros

Price: A BOP offers broad coverage for a relatively low premium. In other words, business owners are getting more insurance for less money.

Coverage: A BOP can cover more than a traditional business insurance policy package would cover, including business income that isn’t automatically included under a standard commercial property policy. Plus, the liability section of a BOP offers the same type of coverage as a standard ISO commercial general liability form (CGL), but at a price that’s affordable to a small business.

Cons

Flexibility: A BOP typically isn’t as flexible as a standard package policy. You may not be able to customize your BOP beyond basic coverage options. A standard ISO BOP, for example, includes only property and general liability coverages.

Lack of Endorsements: With a standard insurance policy package, you can customize options based on your needs. You can add or remove endorsements, for example. to ensure your business is fully protected. With a BOP, you might not be able to add commercial property, general liability, commercial auto, inland marine, crime, and professional liability insurance under the same package. There are fewer modification options.

These disadvantages don’t apply to all BOPs offered by all insurance companies. Some insurers are more flexible regarding what can and cannot be included in a BOP.

Who is Eligible for a Business Owners Policy?

Only certain small businesses qualify for a business owners policy. The insurer will check to verify each small business meets those qualifications before providing coverage.

Generally, businesses must meet specific size requirements to qualify for a BOP. A small wholesaler with 10,000 square feet of space may qualify for a BOP, for example, while an office building with more than 100,000 square feet would not.

Businesses in certain industries may also be ineligible for a BOP. High-rise buildings, manufacturers, auto dealerships, auto repair shops, tree trimmers, bars, parking garages, banks, and theaters, for example, will not qualify for a BOP due to the size or nature of their operations. These companies may have greater liability coverage requirements than what an average BOP would be able to provide.

Specific BOP qualification rules vary between insurance companies. However, some of the most common businesses that rely on business owners policies include:

• Hotels and motels
• Barber shops
• Fast food restaurants, cafes, delis, and sandwich shops
• Small contractors (i.e. residential construction contractors, drywallers, carpenters, and landscapers)
• Apartments and condos
• Retail buildings
• Office buildings

How Does Commercial Property Coverage Work with a Business Owners Policy?

Commercial property coverage on a standard business owners policy is similar to any ISO commercial property policy.

It covers all of the following types of property:

• Buildings located at premises described on the declarations page
• Machinery and equipment permanently installed in covered buildings
• Personal business property located in covered buildings
• Tenant improvements in covered buildings
• Property that belongs to other people (non-leased personal property owned by someone else)
• Building glass owned by you or in your custody (if you are a tenant)

What Types of Damages Are Covered By a Business Owners Policy?

A business owners policy is an all risk policy, which means it will cover any losses or damages by any peril except for perils specifically listed under the ‘exclusions’ section.

You can expect to see similar exclusions to what’s on an average property insurance policy, like exclusions for earthquakes and flooding, among other perils.

Additional Coverages and Endorsements Available for a Business Owners Policy

One advantage of a business owners policy is that it offers broader coverage than a traditional policy. A BOP automatically includes many items that you would normally need to add via an endorsement.

Additional coverages that should be automatically included on your BOP include:

• Business income (covers net income and operating expenses)
• Extra expenses
• Civil authority coverage
• Valuable papers (covers written documents like books, maps, films, drawings, deeds, mortgages, and manuscripts)
• Accounts receivable
• Electronic data
• Newly acquired property
• Interruption of computer operations
• Mold damage

How Does General Liability Coverage Work Under a Business Owners Policy?

The general liability coverage under a BOP consists of two third-party liability coverages:

• Bodily Injury and Property Damage Liability Coverage
• Personal and Advertising Injury Liability Coverage

Both coverages are bundled under a single insurance contract.

Your business also gets medical payments coverage through its BOP, which covers medical expenses incurred by individuals injured as a result of your business activities. Medical payments coverage (MedPay) functions like health insurance. It makes payments to injured parties even when they don’t file a lawsuit.

Optional Coverages and Endorsements Available for a BOP

A business owners policy has several coverages included automatically. However, you can still add certain endorsements to a business owners policy.

Employee Dishonesty: An employee dishonesty endorsement covers the cost of reimbursing customers victimized by a dishonest employee. If an employee stole from a customer, for example, then this endorsement covers that reimbursement.

Money and Securities: This endorsement covers certain lost cash from the business. Small businesses collect cash throughout the day and move it around, and there’s a risk of this cash being stolen.

Business Income and Extra Expenses: If a small business’s property experiences structural damage or other hazards, then the small business may need to temporarily relocate. This endorsement pays for the loss of income and additional expenses incurred as a result.

Equipment Breakdown: Small businesses rely on all types of equipment to earn money – from brewing equipment to HVAC systems. When this equipment breaks down, this endorsement will cover it.

Outdoor Signs: Does your business have a costly outdoor sign? These signs can be damaged by storms and other perils. This endorsement covers the cost of repairing or replacing a sign.

Overall, a business owners policy isn’t as customizable as a standard business insurance package. However, endorsements are available to cover various items as needed for your unique business needs.

Raising BOP Coverage Limits with Commercial Umbrella Coverage

Does your small business have higher liability needs than similar small businesses? Fortunately, most BOP insurers offer commercial umbrella insurance policies.

These policies can be written in conjunction with a business owners policy. Like ordinary umbrella insurance, commercial umbrella insurance raises your liability limits to protect your assets.

How Much Does a BOP Cost?

The cost of a business owners policy varies between providers.

Progressive claims their average BOP policyholder pays $61 per month, for example, or $732 per year. Generally, a small business pays anywhere from $500 to $3500 per year for a BOP, depending on the size and scope of the business.

A larger business with higher liability requirements and endorsements will pay more for a BOP.

A small retail store in a leased building may pay just $600 per year for a BOP, for example, while a dentist office in an owned building with multiple policy endorsements may pay $3,000 per year.

Final Word

A business owners policy (BOP) is a type of insurance coverage available to small businesses that meet certain requirements. It provides a bundle of coverage options at a price that’s reasonable for small businesses.

Original Post Here: Business Owners Policy: Everything You Need to Know About BOPs & How They Work

How to File a Complaint Against an Insurance Company

If you’re unsatisfied with the service received from your insurance company, then you may want to file a complaint.

Each state has strict rules governing how insurance companies operate. If you feel your insurer has broken these rules, then the insurance company may face serious consequences.

There are often multiple ways to resolve issues when you have a complaint against your insurance company. Keep reading to find out what you can do and how to file a complaint against an insurance company.

Why File a Complaint Against an Insurance Company?

There are plenty of legitimate reasons why policyholders file official complaints against insurance companies. Some of the most common reasons include:

• The insurance company is dragging its feet, taking too long with your claim, or refusing to respond to calls or emails
• The insurance company has denied your claim without a valid reason
• The insurance company has offered a disappointingly low payout and is refusing to budge
• An agent or adjuster of the insurance company has treated you improperly during the claim process
• An agent or adjuster has actively taken steps to sabotage your claim

These actions may sound extreme, but they occur every day across the United States and insurance companies are repeatedly found to be acting in bad faith. Unfortunately, many policyholders simply accept these actions and assume there’s nothing they can do.

That’s why each state has an insurance commission in charge of regulating insurance companies.

Steps to Take Before Filing An Insurance Complaint

There are many legitimate reasons to file a complaint – including all of the reasons we mentioned above. However, there are also certain steps you may want to take before filing a complaint.

These steps can solve your problem and avoid the need to file a complaint. Or, these steps can help your insurance claim get processed and you can still file a complaint.

First, we recommend speaking with people of authority at your insurance company.

Make sure your communications are through email so you can keep a detailed record of your attempts and any responses you've received, or haven't received. Insurance companies will sometimes deny that they have received communication or spoken with anyone about your concerns.

There are people at your insurance company who may be able to resolve your claim. You may have had a bad relationship with a specific adjuster who was in a bad mood the day he/she inspected your property, for example. A different adjuster might have a totally different opinion on your claim.

If you are at all considering hiring a Public Adjuster for an insurance claim, we recommend talking to them before you take any further steps. A good public adjuster can help advise you on your options, assist with filing a complaint, and provide guidance on the next best steps, all with your best interests in mind.

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Before contacting your state’s insurance commissioner for insurance problems, we recommend speaking with:

• Your claims adjuster and/or their manager
• The insurance broker or agent and/or their manager
• The ombudsman of your insurance company

By reaching out to the people above, you can legitimately say that you’ve made your best effort to resolve the situation with your insurance company. All of the above individuals have some authority within your insurance company. They can explain why your claim was denied or why you’re experiencing other issues with your claim.

Start by speaking to the customer-facing employees. Contact your claims adjuster or your insurance agent or broker. If you don’t get anywhere, then contact the supervisors or managers one level up.

If you feel nobody is listening to your complaint, or if your insurance company is refusing to budge on anything, then you can take things to the next level by contacting your state’s insurance commissioner and department of insurance.

What is a State Insurance Commissioner?

It’s within your rights as a policyholder to make a complaint to your state’s insurance commissioner.

Each state has a different insurance commissioner. The state insurance commissioner is a public official who regulates the insurance industry in each state.

If there is a problem in the insurance industry, then the commissioner is able to investigate the issue and take steps to resolve it.

Ultimately, the insurance commissioner’s goal is to enforce the state’s insurance laws. Many states have laws governing how long insurance companies can take to respond to your claim, for example. Virtually every state has a law requiring insurance companies to pay your claim in a “reasonable” length of time.

If your insurance company has broken your state’s insurance laws, then your state’s insurance commissioner will want to hear about it.

How Does a State Insurance Commissioner Help?

State insurance commissioners receive thousands of complaints every year. Most of these complaints involve issues like:

• Disputes between policyholders and the insurance company
• Complaints over how one’s insurance claim was handled, denied, or resolved
• Complaints over how an insurance policy was advertised or marketed
• Other perceived violations made by the insurance company over how they handled a claim, dealt with policyholders, or marketed their products and services

Each state’s insurance commissioner will enforce the state’s rules. The insurance commissioner can penalize insurance companies, force insurance companies to pay claims, and take other actions to resolve a policyholder’s complaint.

How to Contact Your State Insurance Commissioner And File An Insurance Complaint

Each state has its own Department of Insurance and its own process for filing an insurance complaint. Almost every state has a system in place for filing a complaint online.

If you are ready to file a complaint against your insurance company, select your state from the dropdown below to find a link where you can view your state’s information to begin filing your complaint.

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If you have questions, need help, or are unsure about filing a complaint for an insurance claim, contact a Public Adjuster for help.

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What You Need When Filing a Complaint

You can’t very successfully accuse an insurance company of wrongdoing without any proof. Your state’s department of insurance will want to see documented evidence of wrongdoing.

Here’s some of the documented evidence you may want to collect before filing a complaint:

• Records of phone conversations with the insurance company
• Printouts of emails with your adjuster or agent
• Photographs or videos of damaged items and property
• Names of any brokers or adjusters you spoke with at the insurance company
• The name of the insurance company and your policy number

The more documentation you have, the more likely your complaint will be taken seriously. If you have significant evidence that your insurance company has done something wrong, then your state’s department of insurance will have no choice but to step in.

What Happens Next?

After filing a complaint with your state’s insurance commissioner, the commissioner’s office may contact you and ask for additional clarification. You may be required to provide additional evidence, for example, or answer basic questions about your claim.

Next, the insurance commissioner will typically take things to the next level by contacting your insurance company.

Your insurance company must respond to the insurance commissioner’s request within a pre-determined length of time – say, 14 to 21 days. The insurance company may be asked to justify the reason for denying your claim, for example.

If the insurance commissioner believes the insurance company’s response was not adequate, then then your case will likely be taken over by a state-designated person who will work with you and your insurance company to resolve the issue.

If your insurance company has an adequate response – like a valid reason to deny your claim – then your complaint may be dropped.

Consider Hiring a Public Adjuster to Quickly Resolve Insurance Claims

Even if your state’s department of insurance assigns a person to resolve your claim, that person cannot represent you in your claim or provide legal counsel. For that reason, some policyholders will choose to hire their own attorney or public adjuster – particularly for high-value insurance claims with lots of money at stake.

A public adjuster is a licensed insurance professional dedicated to maximizing the value of your insurance claim.

The public adjuster works on behalf of you – the policyholder. Yes, your insurance company will send an adjuster to investigate your claim, but this adjuster is a salaried employee of your insurance company. The adjuster is dedicated to minimizing your payout as much as legally possible. This adjuster represents the interests of your insurance company – not you.

A good public adjuster can often double or even triple your insurance payout, and in many cases, an adjuster is the difference between a claim getting denied or approved.

Put simply, hiring a public adjuster shows your insurance company that you mean business and gives you an expert insurance professional on your side.

Some policyholders hire a public adjuster as soon as they file a claim. Others hire a public adjuster after making a complaint to their state’s insurance commissioner.

Final Word on Insurance Complaints

If you feel your insurance company has not treated you fairly, then you have the right to file a department of insurance complaint in your state.

Each state has its own insurance laws. These laws govern how long an insurance company can take to respond to your claim. If your insurer has broken your state’s insurance laws, then you may wish to file a complaint with your state’s insurance commissioner.

View contact information and instructions on filing a complaint for each state’s department of insurance below.

Or, contact ClaimsMate to hire a public adjuster. A public adjuster can maximize your insurance payout and solve your tricky insurance problems.

 

Alabama
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Alaska
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Arizona
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Arkansas
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California
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Colorado
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Connecticut
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Delaware
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District of Columbia
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Florida
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Georgia
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Hawaii
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Idaho
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Illinois
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Indiana
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Iowa Public
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Kansas
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Kentucky
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Louisiana
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Maine
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Maryland
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Massachusetts
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Michigan
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Minnesota
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Mississippi
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Missouri Public
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Montana
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Nebraska
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Nevada
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New Hampshire
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New Jersey
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New Mexico
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New York
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North Carolina
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North Dakota
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Ohio
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Oklahoma
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Oregon
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Pennsylvania
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Rhode Island
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South Carolina
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South Dakota
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Tennessee
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Texas
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Utah
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Vermont
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Virginia
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Washington
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West Virginia
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Wisconsin
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Wyoming
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Read More Here: How to File a Complaint Against an Insurance Company

How Insurance Claim Contractor Scams Work: Everything You Need to Know About Insurance Scams

When you file an insurance claim for property damage, you expect repairs to be completed on-time at a reasonable level of quality.

Unfortunately, some insurance claim contractors take advantage of unsuspecting homeowners. They take the insurance money and leave town, for example, or complete the job to a poor level of quality while still taking the full insurance payout. This often happens after a big storm in an area bringing an influx of storm chasing contractor scams.

Today, we’re explaining everything you need to know about insurance claim contractor scams, roofer and roofing scams, public adjuster scams, and other insurance scams.

How Do Insurance Claim Contractor Scams Work?

Insurance claim contractor scams are shockingly common in every state.

Two contractors were recently arrested in Florida after participating in a roofing contractor scheme. A seemingly-legitimate roofing company called NBRC Construction approached homeowners who needed a new roof. The company collected insurance money to repair roof damage, then fled town, never repairing the roofs for homeowners. The scam was wildly successful: the two contractors scammed over 100 victims across six counties in the Tampa Bay area before being caught.

Many insurance claim contractor scams work in a similar way. Contractors approach unsuspecting homeowners acting like a Good Samaritan: the contractor claims the homeowner’s roof needs to be replaced after a storm, for example. Better yet – insurance will cover the damages!

The contractor offers to handle the claim on behalf of the homeowner. The contractor promises to deal with the insurance company and payment, for example, which is a normal thing requested by legitimate contractors. The homeowner agrees, trusting the contractor and wanting to avoid insurance headaches.

Be advised, in some states, such as Texas, it is illegal for a contractor to handle or negotiate your insurance claim on your behalf.

Then, the homeowner never hears from the contractor again. The paperwork authorizes the contractor to receive the insurance payout. Then, the contractor leaves town.

A scam like this – where the contractor simply leaves town – is the most obvious type of insurance claim contractor scam.

A less obvious type of insurance claim contractor scam occurs when the contractor performs substandard work on a property. The contractor might accept a job, take the insurance money, then repair only half the roof, for example.

Or, the contractor might use lower-quality roofing materials when the insurance claim really covered higher-quality materials.

What Are Storm Chasing Contractor Scams? How Do Storm Chasers Work?

Storm chasing contractor scams are very common. Here’s how the scam works:

• The contractor watches for severe weather to strike a region. This severe weather can be a minor event like a hailstorm or thunderstorm. Or, it could be more serious like a tornado or hurricane.
• After the storm strikes, the contractor gathers a crew and travels to the affected area.
• The team of contractors uses various tactics to persuade homeowners to repair their roofs. The contractor might play the ‘good cop’ role, offering to perform an estimate at no cost whatsoever while being overly friendly with the homeowner. Or, the contractor might take a more aggressive approach, claiming that the homeowner needs to repair the roof immediately or risk further damage.
• Ultimately, the storm chasing contractor will offer to repair the homeowner’s roof at little to no cost to the homeowner. How is this possible? The homeowner simply needs to make an insurance claim to get the payout.
• Some storm chasing contractors will even offer to pay the homeowner’s deductible or refund the deductible.
• The storm chaser then completes a rush job on the roof, performing, say, $5,000 of repairs for a $30,000 job. Or, the storm chaser might simply leave town.

The problem with storm chaser scams is that the repairs may seem adequate to the untrained eye. As far as the homeowner knows, the roofer has done a good job. Unfortunately, the roof might start to fail within a few months, a few years, or by the next storm – long after the contractor has left town.

How Do Public Adjuster Scams Work?

Public adjusters are licensed insurance industry professionals dedicated to helping policyholders like you through the claims process.

A good public adjuster is on your side throughout the insurance claims process. A bad public adjuster, however, may try to scam you.

Just like contractors, there are storm chasing public adjusters that attempt to scam policyholders.

One of the most common types of public adjuster scams is called a claim mill.

How a Claim Mill Public Adjuster Scam Works

A claim mill scam involves one public adjuster or public adjuster company taking on an excessive number of customers, then selling customer referrals at an inflated cost to lawyers.

One of the most notorious claim mill scams in recent Texas history involved a company called Correct Claim. Correct Claim allegedly created a web of interconnected companies, then approached homeowners with offers to serve as a public adjuster for an upcoming claim.

First, Correct Claim offered to complete an appraisal on the home. Unfortunately, the appraisal company used by Correct Claim was owned by a family member. Investigators believed the home appraisals were not completed in an impartial manner. The appraisal company sold the estimates to Correct Claim for $350.

Correct Claim immediately sold the impartial home repair estimates to lawyers for $2,000 apiece. Correct Claim referred homeowners to these law firms, and the lawyers passed the $2,000 charge onto homeowners as a litigation expense.

Public Adjusters in Texas, as well as most states that license Public Adjusters have a duty to represent the policyholder and actually work the claim, cannot receive referral kick-backs, and have to adhere to a code of ethical practices.

In a related case, Correct Claim also sold 770 appraisals to a single appraisal company. That appraisal company was also connected to Correct Claim. The appraisal company could not handle 770 appraisals demanded at the same time. Ultimately, only five appraisals were ever completed.

Later, in court documents, Correct Claim revealed it had over 2,600 clients:

“Correct Claim stated in one of its filings that it had over 2,600 clients. Obviously, it is impossible for a public adjuster to adequately represent 2,600 clients,” explained Dallas attorney Steve Badger, who investigated Correct Claim’s business dealings.

While a company is engaged in all of these shady business dealings, the homeowner is still waiting for repairs to be completed on the home. The homeowner is caught in a ‘claim mill’.

How to Avoid Being Scammed by Contractors or Public Adjusters

The best way to avoid being scammed when dealing with an insurance claim is to ask smart questions. Below, you’ll find questions to ask contractors and public adjusters before hiring them:

Questions You Need to Ask Before Hiring a Contractor

Most contractors are good, hardworking people. Most contractors aren’t trying to scam you. Unfortunately, some low-quality contractors will try to scam you.

To separate good contractors from bad contractors, we recommend asking the following questions:

• Can you provide three referrals?
• Are you local? Where are you based?
• How long have you been in business?
• What’s your experience level for my type of project? Have you successfully completed similar projects in the past?

Questions to Ask Before Hiring a Public Adjuster

Public adjusters provide a valuable service to homeowners in need. To separate good public adjusters from bad ones, we recommend asking the following questions:

• What percentage of claims do you close successfully without needing an attorney?
• Can you provide three referrals?
• How much experience do you have with my type of claim?
• How many clients can you handle at one time while still devoting proper attention to each claim?
• How long have you been an adjuster?
• Do you require payment upfront? What is your fee structure? (If a Public Adjuster asks for any payment up front, be careful. Public Adjusters typically work on a contingency basis and in most states it is illegal for them to charge a fee before the insurance claim has been settled.)

Asking the questions above does two things. First, it gives you valuable information about the public adjuster. And second, it shows the public adjuster that you’re informed. You know how the public adjuster industry works.

Complete a Background Check

We recommend completing a background check when hiring a public adjuster or a contractor.
At the very least, conduct a thorough internet search for the contractor or public adjuster. Check the company’s website and Better Business Bureau page, if possible. Read any available reviews from previous customers.

If you want to take things a step further, then we recommend checking the adjuster’s license to ensure it’s valid.

Every state has some type of licensing search system. The Texas Department of Insurance has a license lookup tool here, for example. All you need is a last name to verify the public adjuster’s license is active.

Final Word

If someone approaches your house after a disaster, you should be wary. It’s possible that the person is a legitimate contractor or public adjuster seeking new business. In many cases, however, this person is trying to take advantage of a homeowner in a vulnerable situation.

Ask the questions above to separate good and bad contractors or adjusters, and never be pressured into making an immediate decision.

Source Here: How Insurance Claim Contractor Scams Work: Everything You Need to Know About Insurance Scams

How Long Does an Insurance Claim Take for Home or Business Property Damage?

So you’re dealing with an insurance claim for home or business property damage. How long will it take to get your money? How long does it take to process a home or business property damage claim?

Keep reading for important things you should know about the process of home or business property damage claims, including approximately how long it takes for an average claim to be processed.

The Average Claim Takes Anywhere from Several Weeks to Several Months

We wish we could give you a specific answer. Unfortunately, home and business property damage claim timeframes vary widely.

Some claims can be completed in under a week, and you’ll have your payout within days. Other claims take months of back and forth negotiations, paperwork, and investigation.

Unfortunately, no two claims are equal. Some claims are simple, while others are complicated. Some claims look simple but are actually complicated, while other claims look complicated but are actually simple.

Even if two neighbors file a claim for roof damage with the same insurance company after the same thunderstorm, the two claims could vary considerably in length.

How Long Are Insurers Allowed to Take?

Many states do not have specific time limits regulating how long insurance companies can take to process a claim. However, laws vary widely between states.

Most states have vague laws that require insurance companies to handle claims in a “reasonable” amount of time, for example.

Other states have more specific limits. Some states require insurers to acknowledge receipt of your claim within 10 to 30 days, for example, and 40 days to accept or deny it.

At the federal level, there is no nationwide law stipulating a payout timeframe for insurers. All timeframes are governed at the state level.

Some States Have Specific Insurance Timeframes

The vast majority of states require insurance companies to handle a claim in a “reasonable” length of time. The following four states, however, have specific time limits insurance companies are required to follow:

California: Insurance companies in California have 40 days to either accept or deny a claim. An insurer can request additional time, but the company must notify the policyholder every 30 days about the status of the claim. After insurers accept a claim and agree to a payout, payment must be issued within at least 30 days. However, this stipulation does not cover claims made under policies that have a waiting period.

Kansas: Insurance companies must investigate your claim no more than 30 days after you filed the claim. If the insurance company needs more time to investigate the claim, the company must notify the policyholder every 45 days in writing, informing the policyholder of the investigation’s status. However, Kansas has no specific state laws governing when an insurer must actually pay a claim.

Missouri: Missouri requires insurance companies to acknowledge a claim and respond to all communication from the insured within 10 working days. Insurance companies also have 15 working days to notify the policyholder of acceptance or denial of the claim after all forms have been submitted. An insurance company can request more time, but the company must provide a status update regarding the investigation within 45 days of the notice and every 45 days thereafter.

Texas: Insurers in Texas must acknowledge a policyholder’s claim within 15 days of receiving notice of that claim. The insurer must accept or deny your claim within 15 days of receiving all necessary documentation. In some cases, an insurer is allowed an additional 45 days to make a decision, although the insurer must inform the policyholder of this delay in writing. The insurance company must issue payment within 5 days of accepting your claim.

How to Expedite a Home or Business Property Damage Claim

There are steps you can take to expedite a home or business property damage claim. Some of the steps we recommend include:

Keep a Home Inventory: Keep track of your personal belongings. Take pictures and keep receipts for all belongings in your home, especially high-value items.

Report Claims ASAP: The sooner you report a claim, the sooner you can settle your claim. Report your claim as soon as it is safe to do so. If you wait too long, your claim may be denied.

Know Your Policy: Take a few minutes to read through your home or business insurance policy. There may be sections in there that you missed. Make sure you understand everything in the policy. It will make future negotiations with your insurance company easier.

Document Your Loss: Take photos of everything related to your insurance claim. Take pictures of the damage from every angle before the cleanup or restoration. Take pictures during the cleanup. Take pictures after. Photograph all possessions, items, furniture, and other items that were damaged.

Top Three Things that Delay an Insurance Claim

Most insurance claim delays are related to the following items:

• Not having adequate paperwork
• Not maintaining a complete inventory of possessions in the home or business
• Not providing the information to your insurance company in a timely way

What to Do If an Insurance Company is Taking Too Long

Sometimes, insurance companies take too long processing an insurance claim. The insurance company might have a backlog of claims it needs to get through.

Some insurance companies, however, use these delays as a tactic. They take advantage of the fact that most states have no specific timeframes for insurance claims.

The insurance company might delay your claim as much as possible, demanding more and more paperwork from the policyholder.

The insurance company might refuse to answer your calls or take several days to return your message.

What happens if your insurance company is taking too long and dragging its feet? How should you respond if an insurance company is taking too long?

There are two good ways to tackle these types of insurance companies:

• Contact a Public Adjuster
• Contact your State Insurance Department

If your insurance company is taking too long on your home or business property damage claim, then we recommend hiring a public adjuster. A public adjuster is a licensed insurance industry professional who knows the tactics insurance companies use to delay claims.

With the help of a good public adjuster, you can get paid as soon as possible. Hiring a public adjuster shows the insurance company you mean business.

Contact A Public Adjuster Today

To hire a licensed, qualified public adjuster today, contact ClaimsMate. We are a public adjuster company dedicated to helping policyholders like you resolve insurance claim issues and get fair treatment from insurance companies.

Learn More Here: How Long Does an Insurance Claim Take for Home or Business Property Damage?