Having homeowners insurance is supposed to relieve financial stress after your home is damaged. But if a claim settlement offer falls short of expectations, or your claim is denied altogether, it can leave you more frustrated than ever.
If you think you’re getting a raw deal, you don’t have to accept it. Whether your home insurance claim was denied or you don't think your payout is fair, you can dispute your insurer's decision. Here’s how to make your case.
Was your claim denied or underpaid?
Let's skip straight to the section of this guide that will help you the most. Select how your insurer handled your claim below to see your next steps.
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Answer a few questions to see custom quotes and find the right policy for you. What to do when your home insurance claim is denied
If your insurer refuses to pay your claim altogether, you don’t always have to take no for an answer. You might be able to dispute a claim denial, but your strategy depends on why your insurer rejected your claim.
Common reasons for claim denials
If your home insurance company denies your claim, it usually has to tell you why in writing. Check your denial letter or ask your insurer if you’re unsure. Here are some common reasons your claim might be denied:
- Excluded events. For example, most standard home insurance policies don't cover damage caused by earthquakes, floods or landslides.
- Normal wear and tear. You’re expected to maintain your property as it ages. If damage is gradual or caused by a lack of maintenance, home insurance typically won’t cover it. Examples include rust, mold, gradual leaks, rotting and infestations.
- Your claim is less than your deductible. If repairs cost less than your deductible — the amount you have to pay before coverage kicks in — there's nothing left for insurance to pay. Keep in mind that you might have a separate, higher deductible for certain types of damage, like wind and hail.
Check the insurer’s reason for denial against what your policy says. If your policy’s language seems unclear, this might help your case. In insurance law, language that's ambiguous or open to interpretation usually favors the policyholder.
Knowing what you’re entitled to under your policy will support your argument if you’re in the right. If you’re not, it’ll keep you from wasting time and energy on fruitless appeals.
Once you know the insurer’s reasoning, try these steps to dispute a claim denial.
1. Build a case and gather evidence
If you still think your claim should be covered, gather evidence to support your argument. This evidence might include:
- Receipts. Say your insurance company denied your claim because it felt the damage was due to your negligence. To counter this, you could collect receipts showing that you’ve done regular maintenance on your property.
- Independent contractor assessments. You can also get an independent contractor to verify that the damage was caused by a covered problem, not lack of maintenance. For example, they might be able to confirm that roof damage was caused by a storm rather than gradual wear and tear.
- Input from a public adjuster. A public insurance adjuster may also be able to assist. Unlike the insurance company’s adjuster, a public adjuster works on your behalf and can help you get the most from your insurance coverage. If they agree that your claim should be covered, they can help negotiate with your insurance company.
2. Appeal the claim denial
🤓 Nerdy Tip
Check your policy or denial letter immediately for an appeal deadline. Timelines vary, but missing this deadline can leave you with little recourse. Once you’ve compiled evidence to support your case, submit a written appeal to your insurer. Explain your point of view, include supporting documentation, and request that the adjuster review the claim.
To have a record of the exact day your letter is sent and received, choose the certified-mail option at your post office.
Even if you’re seething inside, remain polite. Don’t threaten to hire an attorney. If you take an adversarial tone right off the bat, your insurer might decide to let its lawyers do the talking.
» MORE: Is your insurer still refusing to budge? Skip to how to escalate a denied claim.
What to do when your home insurance claim is underpaid
If you receive a payout from your insurance company but it’s less than expected, don’t cash your check just yet. You might be able to challenge the payout amount. First, you’ll need to understand why your claim payment was lower than expected.
Common reasons for underpaid claims
- Inaccurate estimates. The software home insurance companies use to estimate repair and rebuilding costs may underestimate costs in your area.
- Low quotes. Contractors may give insurers quotes that are on the low end for the work you need done.
- Depreciation. Depending on your coverage, insurers might deduct from the value of your property based on how old or worn it is.
- Actual cash value: If you have actual cash value coverage, you’ll receive payment only for the depreciated value of your property and belongings.
- Replacement cost coverage: If you have replacement cost coverage, you’ll be paid the cost to buy a brand-new replacement, but not all at once. Your insurer may initially pay you an amount based on the depreciated value. Once you actually replace the item and submit a receipt, you’ll get another check to cover the additional cost.
Follow the steps below to challenge a low home insurance claim payout.
1. Request a line-item estimate and double-check your coverage
Start by asking your insurer for a line-item breakdown of your payment so you can understand how your claim was calculated. Next, compare this breakdown to your policy declarations page. This is where all your coverage limits and deductibles will generally be listed.
In some cases, your settlement offer may be low because you didn’t buy enough insurance.
Say your house burns down, and contractors estimate that it will cost $300,000 to rebuild. If you have only $250,000 of dwelling coverage in your policy, that’s all your insurer will pay. (There are exceptions to this. If your policy includes extended or guaranteed replacement cost coverage, your insurer will pay a certain amount over your dwelling coverage limit to rebuild your home.)
2. Get estimates from independent contractors
Once you’re clear on your coverage and your insurer’s position, you need evidence to prove the insurer’s numbers are too low. One of the best ways to do this is to get a written estimate from an independent contractor. Rather than a lump-sum estimate that totals the entire cost to repair or rebuild, ask for a line-item estimate that matches the insurer’s.
With major or complicated damage, you might want to hire a contractor to complete a scope of loss document. These documents go beyond a simple estimate. They detail the type and extent of the damage done and the materials needed to repair that damage, along with the cost of materials and labor.
3. Ask for another home visit
If there's a dispute over the extent of damage to your home, you can ask your adjuster to inspect your house again. If you’ve received second opinions from independent contractors or other professionals, such as a smoke-contamination investigator or mold inspector, bring those people to meet with the adjuster.
Determining the full scope of damage isn’t an exact science. It may bolster your argument if other experts can physically point to damage your adjuster might have missed and address potential next steps.
4. File an appeal
If the adjuster refuses to adjust your claim after re-inspection, you can submit a formal appeal. This means explaining your case in writing to the insurance company. Include contractor estimates, scope of loss documents, and photos or other documentation of the damage.
5. Get an appraisal
If the appeal stalls, you can consider appraisal. Appraisal is a process used to resolve disagreements between homeowners and insurers over the amount of damage and cost of repairs. (Appraisal generally isn’t an option for coverage denials.)
Each side picks an appraiser to represent them. This could be a public adjuster, contractor or other professional. Each side pays its own appraiser, while other costs are split equally.
The two appraisers review the damage to your home and belongings and try to agree on how much you’re owed. A neutral party chosen by the appraisers, called an umpire, breaks any deadlocks between the appraisers and chooses the final award. The decision may be binding.
🤓 Nerdy Tip
Appraisal determines only what was damaged and how much that damage amounts to. It won’t resolve disagreements over your coverage, the language in your policy or other issues holding up your claim. How to escalate a home insurance dispute
If filing an appeal isn’t working, here are several ways to escalate a dispute with your home insurance company.
File a complaint with your state insurance department
If your insurer won’t budge, file a complaint with your state’s department of insurance. The agency will review the details of your claim to make sure the insurance company has handled it properly.
State insurance departments can’t always resolve disagreements between insurers and policyholders. But having the department on your side can give you some leverage in negotiations, and it’s free.
Try mediation
Mediation involves hiring an impartial person to help you and an insurance company representative come to an agreement. The mediator can be court-appointed or a private professional whom both sides agree on. You can also go through a state-sponsored mediation program. (Look for one on your state’s department of insurance website.)
You and your insurer may split the cost for mediation, unless your policy or state law says that your insurer must pay.
Mediation typically is fast and may be easier than going to court. But the insurance company’s rep likely will be trained for the process, while it will be brand-new to you. It’s also nonbinding, so you or your insurer can pretend the whole thing didn’t happen if one of you doesn’t like the outcome.
Turn to litigation
Filing a lawsuit against your insurance company is typically your last resort. Because of the time and expense involved, you may not want to pursue litigation unless you’ve exhausted all your other options and there’s a major discrepancy between the payout your insurer offered and the one you were hoping for.
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Document in writing everything your insurer and/or claims adjuster tells you. Keep a log of dates, whom you spoke to and what was said. If you get information by phone or in person, send a follow-up email confirming what you heard.
United Policyholder’s claim guidance library includes examples of forms and requests related to claims. It also has sample proof-of-loss documents that can help with your case, such as damage reports from independent experts.
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