Most property insurance disputes are handled in a multiphase approach. When a claim is submitted to an insurance company, the company will likely dispatch a claim representative, often called a "claim adjuster," to meet with the insured to address the insured's concerns. The claim representative will then gather the necessary information to make a claims decision or retain the necessary professionals to provide their opinions. The primary area of interest for insurance claims adjusters relates to the cause of the damage, and the amount of damage necessary to return the property to its pre-loss condition.
Once a coverage decision is made, if coverage is available, an initial payment is made. This is often referred to as the "actual cash value" of the loss. This amount represents the cost of the damage, when you consider the original cost of the item, its life expectancy and the amount of time remaining. Like most components of a home, most of the house will experience some degree of repair and renovation during the time you own the home. The paint, the roof, the floor coverings, for example, all have an expected period of time during which they will last, followed by a need to repair or replace them.
Negotiations of Property Insurance Settlement
Once the actual cash value is determined, the insured should receive a payment along with an estimate supporting the amount calculated. If not, one should be requested. The estimates prepared by claim representatives are not considered binding, as they can be disputed and negotiated by the insured with the insurance company. As would be expected, there is a great deal of horse-trading that occurs at this stage, as the insured and the insurer seek to convince the other that their calculations are the most accurate and represent the true value of the loss.
In the negotiations to determine the amount of the property insurance settlement claim, it is important to consider a number of factors. For example, you must determine who bears the risk if the calculation is later determined to be incorrect. If it is determined that a roof need only be partially repaired, if there is a payment or a settlement amount reached, you should know who bears the fault if the amount ended up being more. This is not always clear and should be stated with particularity in written communications, for the benefit of the insured and the insurer.
Property Damage Settlement Impact on Future Claims
Next, if there is a property damage settlement between the parties, it should be determined what impact, if any, this has on future property damage settlement claims. Sometimes, insureds will seek to negotiate a particular payment above that offered by the carrier, only to discovery later they are being cancelled by the insurance company. Additionally, the insurance company may negotiate a particular payment, only to learn later that a cheaper, less comprehensive approach to repairs is being attempted. In so doing, there is a question as to the impact this may have on the continued insurance of the home. Again, it is most important that all expectations be stated in writing, so as to avoid any future disputes.
Like most commercial transactions, insurance property settlements are negotiated and should be made based upon informed choices, regardless of who you are (insurance company or individual). By defining expectations at the time of the insurance settlement, you can avoid complicated and potentially costly disputes that may arise in the future.
To learn more about the process of adjusting loss for a property insurance claim, please contact Corless Barfield Trial Group at 813-498-1623 or, toll free: 877-517-5595.