Sometimes the policyholder and the insurance company have a difference of opinion regarding the amount of money the policyholder is owed after a claim, despite everyone’s best efforts. The difference can be one of scope, where one party believes there is more damage to the property and/or greater repairs are needed to put the policyholder back into a pre-loss position. The difference could also be about the valuation of the loss, which is the amount of compensation the insured is entitled to receive under the policy. One party may think the cost of repair/replacement or dollar value of the claim is larger (or smaller) than the other party. Other areas of disagreement may relate to causation and coverage: What is the cause of the loss and is it or the property covered under the policy?

If policyholders find themselves in a situation where they disagree with the insurance company, what options are available to resolve the disagreement? The short answer is there are many options for engaging the company in discussions and ongoing negotiations, what those options are depends on the circumstances of the individual claim and the conditions of the policy.

Below are a few steps a policyholder can take to move a claim towards resolution.

First, identify the scope of the disagreement and explain the issue to the insurance company representative.

A phone call may be a good first step, but following up in writing is very important. Detail clearly in writing the issues with the insurance company’s evaluation. State specifically the action you want the company to take and if you believe the amount of the company’s evaluation of the loss is based on incorrect information, tell the company this explicitly and with specific reference to the reasons why.

Second, gather the documentation and identify any experts needed to support your position. Provide a copy of all documentation to the insurance company. How you go about this and the type of documentation or experts needed will be different depending upon the type of disagreement. For example, perhaps the insurance company has provided you with an estimate of repair that you do not feel represents the true cost of repairs, either because the pricing is too low or the identified repairs are not accurate. Maybe the insurance company estimate contains incorrect square footage of a structure, or the estimate is based on a different type of building material. Pointing this out and providing correct information to the company is a good first step.

You might also want to consider involving an expert to assist you in presenting the information. For example, you may want to involve a contractor to provide a real life repair bid or an engineer to determine the cause of the damage. You may need to ask your accountant to help you present your business income claim. Do not be afraid to contact your insurance agent. Often the agency has an employee dedicated to helping its clients navigate the claims process and advocating on the clients’ behalf.

Third, request a response from the company within a specific period. You do not want to be unreasonable (i.e. demand a response same day, etc.) but you do want to set a time-frame for a response so you can calendar a date to follow-up or look for a substantive response.

Four, during the entire process, do not be afraid to ask questions and request additional information or explanation. If you do not understand something, ask for clarification!

Five, look to the policy – does it provide a mechanism for resolving disputes, such as an appraisal or arbitration clause? If so, is that mechanism appropriate given the type of disagreement?

Appraisal is a policy provision used when the policyholder and the insurance company disagree as to the amount of the loss. It does not typically include procedures for resolving a coverage dispute (such as whether a certain type of property or type of loss is covered under the policy). If the policy has an arbitration provision, however, it may provide a process for resolving valuation and coverage issues in one setting.

Even after taking the above steps, sometimes a difference of opinion still exists, and a policyholder may need to involve an attorney who is knowledgeable about insurance. A qualified attorney can help the policyholder understand the carrier’s position and help determine if it is correct or not. The attorney can also advise on next steps, which could include appraisal, arbitration, other form of alternative dispute resolution (such as a mediation), or potentially a lawsuit.

What does this look like in the context of a “real-life” claim?
Policyholder P. notices roof damage to a storage facility shortly after a hailstorm in the area. While both parties agree the roof needs to be replaced, they disagree as to the reason. P. believes the storage building requires a new roof due to hail damage. The insurance company disagrees and concludes that while some portions of the roof require minor repairs due to hail damage, the roof replacement is required due to its age – a pre-existing condition of the roof – and not because of a covered hail event. The insurance company declines coverage for the cost to replace the roof and instead offers a small settlement for the minor repairs only.

What can P. do to contest the decision?
P. should contact the insurance company and ask for any reports or photographs upon which the company based its decision. P should then provide the insurance company with the information that supports P’s position that the roof replacement is due to hail. This information may include photographs, reports, and/or statements from a qualified engineer or roofing contractor. P. may request that the insurance company conduct a reinspection of the risk and arrange to have P.’s own expert present at the inspection.

In addition to providing the above, P. should make a written request for reconsideration of the denial of the claim for roof replacement.

Staying involved in the claims process, asking questions, listening to differing opinions, and gathering the necessary information or experts will help lead P. towards resolution of a disputed claim.