Most insurance companies do business ethically and will pay their customers’ claims when disaster strikes. Yet, it’s not your insurance agent’s job to know everything you own. It’s yours. And the firms for whom they work are not exactly motivated to simply fork over everything a claimant says they are entitled to—after all, insurance companies stay in business just like anyone else by keeping expenses down. So when forced to go up against a large insurance company over a claim—especially while you and your family are working through a crisis—walking away with everything you deserve is a tall order and not very likely. Following the steps below, however, can help you plan ahead to receive the future payout you will want and deserve.
Report your claim promptly and read your policy
Don’t wait around to report a claim. As soon as it is feasible, make sure you register your claim. This will avoid delays and ensure that it gets immediate attention. In the event of a large-scale disaster, this is especially important. Read your policy thoroughly, preferably before you need to make a claim, so that you understand what you have signed up for and what your insurance company actually covers and what it doesn’t.
When you find yourself in a position to make a claim, this generally means that there is chaos swirling around you. Avoid that potentiality by organizing, documenting and recording everything you own today. Do it in as systematic a fashion as you can. Chances are if your entire home will be involved. Therefore, you may want to call in a professional home inventory service to thoroughly document your home and all of its contents. This kind of prudent action will pay great dividends later.
Don’t get rushed into a quick settlement
Some insurance adjusters count on claimants being under stress when they show up, so they offer to write a check “on the spot.” If you keep your head and are able to calculate ahead of time what offer you’ll accept as reasonable—even a ballpark figure—then you’ll be in a much stronger negotiating position, as any first offers are often far too low. Armed with an accounting of what you know you own, and can prove immediately gives you the advantage.
Be polite, but assertive, to ensure that you recover a fair insurance settlement
You don’t have to be rude or belligerent, but you do need to be prepared to stand your ground. Remember: insurance adjusters are trained to make you a lowball offer first—this is not the offer you should accept. Do your homework ahead of time using a professionally-executed home inventory and you will be better prepared for this kind of situation.
Network before disaster strikes
Get to know a contractor or two. Not only is this person more likely to give you a better price than any random contractor chosen by the insurance company, but they may also be able to get to your job faster, due to the previous relationship they have with you. It’s also a good idea to connect with an insurance adjuster who doesn’t work for your insurance company, in order to get a second opinion when you need it.
Know how your items are valued by the insurance company
You need to know three terms that affect the amount of your contents claim recovery: depreciation, actual cash value (“ACV”), and replacement cost (“RC”). Depreciation is simply the loss in value from all causes, including age, wear, and tear.
The adjuster depreciates certain household items to account for their age, and then gives you a check for the “actual cash value” (“ACV”) of your entire inventory. Basically, the ACV is the “old” price of the item, what a buyer might have paid you for it pre-loss. Once you replace items, your insurer generally owes you the balance between the ACV and what it actually cost you to replace or repair. Remember: once the check is cut, that’s all you’ll get, regardless of what it costs to actually replace what you had, so be sure to know what you’re asking for and do your negotiations properly up front in this scenario. However, most policies these days are “replacement cost,” which means they cover the cost of replacing what you’ve lost. In order to collect the full reimbursement you’re entitled to under an RC policy, you have to actually replace the items and send the receipts to the insurer with a demand for the balance they owe you.
Navigating through negotiations with the insurance company, especially in the midst of a loss, can be extremely emotionally difficult. Be sure to enlist the help of your friends and family to help you keep a clear head so you’re properly and fairly reimbursed for your losses.