What to Do if Your Homeowners Insurance Claim is Denied

Having your home or belongings destroyed or damaged by a fire, storm or other disaster can be a traumatic experience. It can be even worse if your insurance company refuses to pay to repair or replace your property. Though insurance companies are tough to fight, you do have rights. Here’s what to do if your homeowners insurance claim is denied.

How do I appeal an insurance claim denial?

The first thing you’ll need to do if the insurance company denies your claim is to review the denial letter. The insurance company is required to specify the reasons for denying your claim in writing. If the insurance company’s rationale is based on inaccurate information, you have the following options for recourse:

Contact the insurance company. If you have documents, photos or other evidence refuting the insurance company’s reasons for denying your claim, present this information to the insurance company’s claims representative or manager. You can usually start off with a phone call. You may even be able to send digital copies of your documents by email while you are on the line.

File a complaint with your state’s insurance commissioner. Insurance companies and agents are required to cooperate with an insurance commissioner’s investigation of consumer complaints. Any supporting documents and photos you can provide will strengthen your case.

Consider mediation. Some states offer free mediation programs to resolve disputes over insurance claims. You and a representative from the insurance company discuss the claim with a neutral mediator who facilitates a non-binding resolution, if possible. You don’t have to bring an attorney to mediation, but you can.

Eligibility thresholds vary by state. In Florida, you can bring a claim in excess of $500 to mediation. California only makes mediation available for claims stemming from a declared emergency in excess of $7,500.

Consider legal action. Due to the time and expenses that lawsuits require, suing the insurance company is often considered a last resort in disputing a claim.

Why would an insurance company deny a claim?

Your claim can usually only be denied if the cause of damage is not covered by the policy or if you don’t live up to your contractual obligations. Here are some of the more common reasons for an insurance company to deny a claim.

Missed filing deadline

Your policy specifies the amount of time you have to file a claim after a loss or damage occurs. This is a deadline you don’t want to miss.

Nonpayment of premium

If you fall behind on payments, the insurance company needs to notify you in writing of a pending cancellation and the deadline for submitting your reinstatement fee. Coverage typically expires if you don’t submit your payment by the end of the reinstatement period.

Unless you can prove that the insurance company mishandled your payment or did not provide required notification, this is a tough one to appeal.

Misrepresentations

If the adjuster who inspects your home finds conditions that are different from what was stated in your claim form or application, your claim could be in jeopardy.

Insufficient documentation

If you claim your state-of-the-art entertainment components or luxury cooking utensils were destroyed or stolen, the insurance company is probably going to want to see receipts or other documentation of their value.

The best practice is to keep a home inventory, listing your possessions with as many details as possible. Include brand and model names, purchase dates and, when available, receipts and serial numbers, too.

Damage from an excluded cause

A typical homeowners policy does not cover floods, earthquakes, sinkholes and other excluded perils. Knowing what’s covered ahead of time is better than discovering what’s not covered after your claim is denied. Don’t ever be shy about asking your agent about your coverage.

Damage to undisclosed improvements

If you don’t let your insurance company know about remodels and additions to your home, any damage they sustain probably won’t be covered by your insurance policy. Let your insurance agent know about your home improvements as soon as they are completed.

Neglect

An insurance policy typically requires you to maintain your property with reasonable care. An insurance company might contend your negligence caused, for example, a rupture in your water heater or plumbing system to deny your claim. Keep receipts and other records of the maintenance work your contractors or you perform.

Professionals to help you dispute an insurance claim denial

For help disputing your insurance claim denial, consider hiring a public insurance claims adjuster or an attorney. You can hire one of these professionals at any point in the claims process. Here’s how they can each help.

Public adjusters are licensed insurance professionals you can hire to prepare your claim or appeal a claims settlement on your behalf. Public adjusters will typically review your policy and help you gather the documentation you need before you file the claim or if you need to appeal a denied claim. Public adjusters can also dispute a claims settlement that you think is too low.

Many offer a free initial consultation and accept a percentage of your settlement, usually 5% to 20%, as payment. If your claim has already been denied, the consultation and payment method can protect you from hefty upfront costs while you get a professional opinion on your chances for a successful appeal.

A public adjuster needs to be licensed in your state, and a license from the National Association of Public Insurance Adjusters is even better.

A typical attorney is going to be considerably more expensive than a public insurance adjuster. You don’t have to wait until you're ready to file a lawsuit to bring an attorney on board. Lawyers are expensive, but the insurance company’s claims representatives are going to pay extra attention to the details of your claim when your attorney inquires about them.

When shopping for an attorney, look for one specializing in insurance law with a track record of obtaining successful outcomes for homeowners.

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