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Homeowners Insurance

DEALING WITH YOUR INSURANCE COMPANY IF YOUR HOME IS DAMAGED

     Insurance companies are suppliers of public service. They sell “peace of mind” to consumers who rely on these companies in times of urgent need. Hence, insurance companies are bound to conduct themselves with utmost good faith for the benefit of their policyholders. The law has a specific term for this duty - the Covenant of Good Faith and Fair Dealing. The failure to comply with this covenant constitutes an unlawful conduct called insurance bad faith.

     An insurance company is obliged to pay for repairs if your house is damaged by an event which is “covered” under your policy. What is covered or not are spelled out in your policy. But the means and methods of how you obtain all benefits involves going through a claims process. To get what you deserve in this process, you got to know the rules.

     The following is a list of the insurance company’s important obligations to its policyholders. The list is organized based on the policyholders’ rights.

     Right To Have A Prompt Settlement
     Under the Insurance Code and Regulations, the insurer is required to:

     1. Acknowledge receipt of Notice of Claim by the insured within 15 days of receipt. It is important to follow up your notice and requests with letters. Keep a diary of your communications, noting the dates of the call, the persons you spoke to, and the issues discussed.

     2. Furnish the insured within 15 days from receipt of Notice of Claim all necessary forms, instructions and reasonable assistance in submitting the Proof of Claim. This assistance shall include emergency allowance to pay for necessary food, clothing, travel and rental expenses. Proof of Claim shall include any documentation or evidence in support of your claim for benefits.

     3. Promptly initiate necessary investigation of claims within 15 days. These shall include the necessary visit, inspection, estimate and evaluation of your damages, including the hiring of professionals to assist in the determination of a fair and reasonable amount. The duty of good faith requires the insurer to investigate promptly, fully and fairly.

     4. Provide complete response to communications from policyholders within 15 days from receipt of the said communications.

     5. Upon receiving Proof of Claim, claim must be accepted or denied within 40 days. If more time is required, written notice to policyholders shall specify additional information required and reasons for inability to make determination. You should cooperate with the adjuster and provide any requested information without delay. Thereafter, written notice should be provided every 30 days by the insurer if denial or acceptance cannot yet be made.

     6. Upon acceptance of claim, the insurer shall tender payment of undisputed amount in 30 days.

     In addition to the insurance companies’ obligations to protect the policyholders’ right to have a prompt settlement, the insurance company is owes the following duties, and comply with those duties in good faith:

     A. Right To Have A Fair Settlement
     The policyholder is entitled to have a claim processed or handled with a fair settlement procedure, and to that extent, an insurance company has the following duties in regard to its insured:

     1. To not discriminate based upon race, gender, income, religion, language, sexual orientation, ancestry, national origin, physical disability or territory.

     2. To disclose all benefits, coverage and time limits to the insured. The company has an affirmative duty to provide these information to ensure that all rightful benefits are provided. However, it is still a good idea to ask questions about available benefits.

     3. Assist you in determining additional benefits, upon receipt of additional proof.

     4. Not require a Release before checks are issued in partial payment. The Release and its legal effects shall be fully explained in writing, if you are not represented by attorney. However, you should be very cautious in signing Releases or Settlement for you may give up certain important rights. Get legal advice.

     5. Not seek information that are not reasonably required or material to the claim. Your privacy rights are not waived simply because you filed a claim with your insurance company.

     B. Right To Equitable Settlement
     Most importantly, the policyholder is entitled to a settlement amount that is fair and equitable. To ensure that the policyholder obtains the fair settlement amount, insurer has the duty:

     1. To not lowball or make unreasonably low settlement offers. The reasonableness of an offer is determined by the following: (a) Evidence submitted in support of the value of the claim; (b) Evidence reasonably available to the company; and (c) Procedures used by company in determining the amount of the damage.

     2. To hire competent and unbiased adjusters and contractors who evaluate your damages. Contractors who rely on your insurance company for business are not usually the most independent source of information regarding the full extent of your damages. Seek and get estimates from other contractors and compare these with the estimates of the insurance-hired contractors.

     3. The insurer must inform you of coverage under which payment has been made. Since different coverages are available under your policy, you should be informed of the nature of the payments being made. This is important in determining whether the policy limits has been exhausted or not.

     4. The company should promptly provide basis of denial or offer of settlement.

     5. The company should not advise you not to hire an attorney. If the adjuster is doing the right thing, he or she should not be concerned about any attorney involvement in the claims process.

© Law Offices C. Joe Sayas, Jr.