How do I File a Homeowner’s Claim?
If someone has become injured on your property or if a violent storm destroys your home, you will need to file a claim with your insurance company. Remember, a homeowners policy is a contract between you and your insurance company. And there are rules and procedures that you and your insurer must follow. Read your insurance policy to see what your responsibilities are.
Report any crime to the police
If you are the victim of a theft or your home has been vandalized or burglarized, report it to the police. Get a police report and the names of all law enforcement officers that you speak with.
Phone your agent or company immediately
Insurance policies place a time limit on filing claims. Find out what the time limit is. Ask questions: Am I covered? Does my claim exceed my deductible? (Your deductible is the amount of loss you agree to pay yourself when you buy a policy.) How long will it take to process my claim? Will I need to obtain estimates for repairs to structural damage?
Make temporary repairs
Take reasonable steps to protect your property from further damage. Save receipts for what you spend and submit them to your insurance company for reimbursement.
The insured must "keep an accurate record of repair expenses," according to condition d.(2). Without documentation, the insured will have no basis for a claim for reimbursement. Furthermore, condition d.(2) states that the repairs must be both reasonable and necessary.
Prepare a list of lost or damaged articles
You are going to need to substantiate your loss. Avoid throwing out damaged items until the adjuster has visited your home. You should also consider photographing or videotaping the damage. Prepare a home inventory, make a copy for your adjuster and supply him or her with copies of receipts from damaged items
Inventory of Damaged Personal Property
The insured must prepare an inventory of damaged personal property showing the quantity, description, actual cash value, and amount of the loss and attach all bills, receipts, and related documents to support that inventory.
Since damaged personal property is either damaged or destroyed or has disappeared, the insured must inventory this property. The inventory must describe the property, quantity, actual value, and amount the insured is claiming for the loss.
Along with the inventory, the insured must provide records to substantiate the amount claimed and must present bills, receipts, and related documents of sale. If the insured does not have bills or receipts, then photos, warranty cards, or instruction manuals will usually suffice. The insured must be able to prove both ownership and value of the items listed. The insured must prove the loss; the insurer need not disprove that an item was damaged or lost. This becomes extremely important for extensive damage or a substantial theft loss. However, the claims adjuster should make this request tactfully, realizing that the insured has just experienced a traumatic incident. It is usually a good idea for the adjuster to submit a written request for this information.
Showing Damaged Property
As often as the insurer requires, the insured must show the damaged property. The insured must allow the insurance company to inspect the damaged property to verify the circumstances and amount of loss. The company is entitled to more than one inspection; in fact, the company might need several inspections to complete its investigation. The insured should be reminded in such cases that the policy states the property is to be shown "as often as we reasonably require."
In many respects, a contract of insurance is no different from any other
contract. Insurance is an agreement between parties, for consideration, to act
in some way. The insurance contract is a contract in which one party, the
insured, pays a premium to the insurer; the insurer promises to protect the
insured against losses described in the policy. The conditions are an integral
part of the contract. Conditions are qualifying agreements that state who is to
do what, as well as when and how it is to be done, for the contract to become
effective. Conditions explain the rights and duties of the parties to a contract.
One of the most important set of conditions of a property insurance contract
is the Insured's Duties After Loss. This chapter closely examines all aspects of
this important policy provision. The discussion is confined to the ISO HO-3
and commercial property forms because they are widely used. A word of
caution: specific language varies by state and company. Therefore, adjusters
should consult the policy each time these conditions are involved.
Insured's Duties After Loss
What to Do after a Loss
The loss you have recently suffered can be very draining. But by immediately taking the proper steps, you have the power to minimize the damage and help the recovery process. Note: Each loss situation is unique. These general guidelines are not intended to replace professional insurance, legal and/or financial advice for specific cases. Please feel free to contact us for further information and assistance.
• Mitigate your loss and protect the property from further damage.
• Move quickly to save special property such as books, pictures and important
• Have one spokesperson from your family communicate with the insurance
• Document your activities in a log.
• Understand your duties and requirements.
• Have an initial policy analysis to familiarize yourself with your rights and obligations.
• Control access to the premises.
• Know the players, including who the insurance company's representatives are.
• Know your broker or agent's role.
• Take a proactive position: you must make a claim.
• Hire your own experts.
• Do not rely solely on your historical records; secure replacement estimates.
• Understand that your claim will have to be verified.
• Understand the negotiation process.
• Concentrate on maintaining your family and employment, not on preparing claim details
leave that to the experts.
If this all sounds like a lot of complex work, that's because it is. But we're ready to help you with any or all of these steps. Our professionals can get to your loss site quickly and have the resources to guide and support you throughout the claims adjustment process.
Some risks are less obvious than others. To make sure your home and possessions are adequately protected, you might want to consider the Following:
• As a homeowner, you have the responsibility of detailing and proving any loss to your insurance company. Are you confident that you can provide a comprehensive and detailed claim?
• What are my rights and obligations under my policy?
• Are "replacement cost," "actual cash value" and "depreciation" familiar terms?
• If I have an older home that is partially damaged and needs to comply with the current building codes, how will my policy respond to the additional costs?
• How do I accurately account for and determine the value of my lost or damaged personal property?
• How do I correctly value the building damage so it is properly repaired or replaced?
• If my home was totally destroyed, what would I collect—its replacement cost, the actual cash value (replacement less depreciation) or the market value?
• If I have replacement cost insurance on my personal property, how am I compensated?
• Do I have sufficient knowledge of the claims process to effectively negotiate with the insurance company adjuster?
• Can I commit the time and attention needed to settle my claim accurately and fairly without additional strain on my professional or private life?
The insured's duties after a loss are explicitly stated in the policy provisions. Adjusters must proceed carefully, however, because waiver and estoppel can affect the insured's duties.
This set of conditions begins with the statement, "In case of a loss to covered
property, you must see that the following are done." Both the loss and the
property must be covered for this condition to be effective. The condition also
states, "you must see that" something be done, meaning that these duties can
be performed by someone other than the insured.
Following a loss, the insured must give prompt notice to the insurer or to the
insured's agent. This clause does not require written notice, only that notice
be given in some form. Some policies require written notice of loss. Also, the
period of time for giving notice is not specified, only that it be prompt . The
insured is held to a standard of what is reasonable notice under the circumstances.
Notice to the agent is notice to the company, so if the claim Is
reported to the agent, proper notice has been given.
Notice to Police
The insured must notify the police after suffering a loss by theft. The police
might be able to trace and recover the stolen property and arrest the thief. This
requirement might also deter fraudulent claims, since in most states submitting
a false police report is a felony. In some areas, police reports are a matter
of public record and can be obtained by the claims adjuster. This condition
also benefits the insurance company, which can notify the police of its interest
in any recovered property that the company might have already paid for in the
form of settlement with the insured.
Notice to Credit Card Company
The insured must also notify the credit card or fund transfer card compa ny if
the loss involves credit or fund transfer card coverage The purpose of this
provision is to restrict the insured's liability for charges or withdrawals made
with the insured's credit card or fund transfer card by an unauthorized person.
Protection of Property
The insured must protect the damaged property from further damage. In other
words, the insured is responsible for mitigating the loss. After a fire, boarding
up the property, obtaining temporary electrical service, or renting portable
heaters to prevent freezing might be necessary. For water damage, shuttin g off
the water and removing wet carpets might be necessary. Although the policy
indicates that the insured is responsible for protecting property, the policy
does provide coverage for the expense of doing so.
The Additional Coverages
The insured must provide the insurer with the records and documents that it
requests and permit the insurer to copy them. This provision allows the insurer
to obtain any records of the insured that substantiate the claim. Records can
include documents such as bank records, employment records, driving records,
and income tax records. Submitting income tax records is controversial. The
adjuster should check applicable state court decisions on this matter. This
provision and condition 2.e (see Exhibit 4-1) are extremely important because
obtaining the insured's records helps the adjuster to prepare for giving an
examination under oath.
The policy conditions pertaining to the insured's duties after loss and the
appraisals are essential for resolving claims under property insurance policies.
Performance of these duties is essential to an insurer's ability to adjust a loss.
Unless a policyholder complies with these provisions, the policyholder is not
entitled to payment for a loss. Accordingly, insurers should not inadvertently
waive these requirements.
Most of the policyholder's duties after a loss are common-sense requirements,
including promptly notifying the insurer, protecting the property from further
loss, making necessary repairs and keeping records of the repairs, and inventorying
the damaged property and showing it to the insurer.
The proof of loss is a formal statement by the policyholder that provides the
insurer with all information essential to adjusting the loss. Because it is a
formal sworn statement, it must be accurate, thorough, and honest. Some
insurers waive the proof of loss requirement with certain losses. In most circumstances,
the insurer is obligated to pay the claim within a certain number
of days after receipt of the proof of loss. Thus, if the proof of loss is in any way
incorrect or inadequate, the insurer must immediately notify the policyholder
Examinations under oath are not conducted for all claims. However, they are
essential when the policyholder has not provided sufficient information to
adjust a loss or when the information is not consistent or convincing. An
examination under oath is conducted in person to enable the examiner to
evaluate the policyholder as a witness. The examinee must swear to and sign
The appraisal clause serves one purpose: resolving differences over the value of
a loss. In that respect, it is an essential provision for conclusion of disputed
claims. Adjusters should select appropriate appraisers. The selected appraisers
will resolve the amount of the loss or will select an umpire who can resolve any
differences between the appraisers.
How do I take a home content inventory and why?
Would you be able to remember all the possessions you've accumulated over the years if they were destroyed by a fire? Having an up-to-date home inventory will help you get your insurance claim settled faster, verify losses for your income tax return and help you purchase the correct amount of insurance.
Start by making a list of your possessions, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals you have. For clothing, count the items you own by category -- pants, coats, shoes, for example -- making notes about those that are especially valuable. For major appliance and electronic equipment, record their serial numbers usually found on the back or bottom.
■ Don't be put off!
If you are just setting up a household, starting an inventory list can be relatively simple. If you've been living in the same house for many years, however, the task of creating a list can be daunting. Still, it's better to have an incomplete inventory than nothing at all. Start with recent purchases and then try to remember what you can about older possessions.
■ Big ticket items
Valuable items like jewelry, artwork and collectibles may have increased in value since you
received them. Check with your agent to make sure that you have adequate insurance for these items. They may need to be insured separately.
■ Take a picture
Besides the list, you can take pictures of rooms and important individual items. On the back of the photos, note what is shown and where you bought it or the make. Don't forget things that are in closets or drawers.
■ Videotape it
Walk through your house or apartment videotaping and describing the contents. Or do
the same thing using a tape recorder.
■ Use a personal computer
Use your PC to make your inventory list. Personal finance software packages often include a
homeowners room-by-room inventory program.
■ Storing the list, photos and tapes
Regardless of how you do it (written list, floppy disk, photos, videotape or audio tape), keep your inventory along with receipts in your safe deposit box or at a friend's or relative's home. That way you'll be sure to have something to give your insurance representative if your home is damaged. When you make a significant purchase, add the information to your inventory while the details are fresh in your mind.
If you need to relocate, keep your receipts
If your home is severely damaged and you need to find other accommodations while repairs are being made, keep records of all additional expenses incurred. Most homeowners insurance policies provide coverage for the "loss of use" of your home.
Get claim forms
Once your insurance company has been notified of your claim, the company is required to send you the necessary claim forms to you by the end of a specified time period. (The time period varies from state to state.) Return the properly filled out forms as soon as possible in order to avoid delays.
Have an adjuster inspect the damage to your home
Your insurance company will probably arrange for an adjuster to come and inspect your home. Once you and your insurance company agree on the terms of your settlement, state laws require that you be sent payment promptly. In most cases, your claim will be processed quickly. If you have any questions about the claim filing laws in your state, call your insurance agent or your state department of insurance.
How does the payment process work?
An adjuster will inspect the damage to your home and offer you a certain sum of money for repairs. The first check you get from your insurance company is often an advance against the total settlement amount.
It is not the final payment.
If you're offered an on-the-spot settlement, you can accept the check right away. Later on, if you find other damage, you can "reopen" the claim and file for an
additional amount. Most policies require claims to be filed within one year from the date of disaster. Check with your state insurance department. When both the structure of your home and personal belongings are damaged, you generally receive two separate checks from your insurance company, one for each category of damage. You should also receive a separate check for additional living expenses that you
incur while your home is being renovated.
If you have a mortgage on your house, the check for repairs will generally be made out to both you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowner's policy and that they are a party to any insurance payments related to the structure. The lender gets equal rights to the insurance check to ensure that the necessary repairs are made to the property in which it has a significant financial interest. This means that the mortgage company or bank will have to endorse the check. Lenders generally put the money in an escrow account and pay for the repairs as the work is completed. You should show the mortgage lender your contractor's bid and let the lender know how much the contractor wants up front to start the job. Your mortgage company may want to inspect the finished job before releasing the funds for payment to the contractor. Some construction firms require you to sign a form that allows your insurance company to pay the firm directly. Make certain that you're completely satisfied with the repair work and that the job has been completed before you let the insurance company make the final payment. Remember, you won't receive a check for the repair job. The construction firm will bill your insurance company directly and attach the "direction to pay" form you signed. Bank regulators have guidelines for lenders to follow after a major disaster. If you have any questions contact your state banking department.
The first step is to add up the cost of everything inside your home that has been damaged in the disaster. Now is the time to review your personal inventory, to help you remember the things you may have lost. If you don't have an inventory, look for photographs or videotapes that picture the damaged areas. For expensive items, you may also contact your bank or credit card company for proof of purchase. When making your list, don't forget items that may be damaged in out of the way places such as the attic or tops of closets. If you have a replacement cost policy, you will be reimbursed for the cost of buying new items. An actual cash value policy will reimburse you for the cost of the items minus depreciation. Regardless of which type of policy you have, the first check will be calculated on a cash value basis. Most insurance companies will require you to purchase the damaged item before they will reimburse you for its full replacement cost. If you have financed your home, your bank may have received a check for both repairs to your home and your possessions. If you don't get a separate check from your insurance company for your belongings, ask the lender to send the money to you immediately. If you have a replacement cost policy, you may be required to buy replacements for items damaged before your insurance company will compensate you. Make sure to keep receipts as proof of purchase. If you decide not to replace some items, in most cases you'll be paid the depreciated or actual cash value of the items that were amaged. You don't have to decide what to do immediately. Your insurance company will generally allow you several months from the date of the cash value payment to replace the item. Ask your agent how many months you are allowed before you must replace your personal possessions. Some insurance companies supply lists of vendors that can help replace your property.
Additional Living Expenses
Your check for additional living expenses should be made out to you and not your lender. This money has nothing to do with repairs to your home and you may have difficulty depositing or cashing the check if you can't get the mortgage lender's signature. This money is designed to cover your expenses for hotels, car rentals and other expenses you may incur while your home is being fixed.
Options For ReBuilding
If your home has been destroyed, you have several options:
• Rebuild your home on the same site.
The amount of money you'll have to rebuild your home depends on both the type of policy you bought and the dollar limit specified on the first "declarations" page of your policy. Generally, you are entitled to the replacement cost of your former home, providing that you spend that amount of money on the home you rebuild. Remember, your insurance policy will pay to rebuild your home as it was before the disaster. Itwon't pay to build a bigger or more expensive house. A similar rule applies to repairs.
■ Decide not to rebuild or to rebuild in a different location.
The amount you'll get from your insurer will be determined by your policy, state law, and what the courts have ruled on this matter. If you decide not to rebuild, review your policy and ask your insurance agent or company representative what the settlement amount will be.