When you take up insurance coverage, you expect the provider to be your savior and protector in times of need. However, this isn’t always the case, as some providers have mastered paying out the least possible amount.
Think of it this way. You’re involved in a car crash or another accident covered by your policy. You follow the law, complete all the reports, and file your claim. Instead of the support and concern you expect from your insurer, all you get is delays, lowball offers, or outright denials.
This is common among insurance companies since they make money by paying out as little as possible. For example, Allstate tends to underpay claims, leaving their clients bitter and frustrated.
So, what can you do when your insurance company may have seemed to turn against you?
Why Insurers Underpay Claims
Insurance companies underpaying claims is nothing new. They do that all the time. Why, you may ask? It’s simply to make as much profit as possible.
Here’s how it works. You pay monthly premiums, but when you file your claim, the insurance companies either refuse or limit payouts as much as possible.
To reduce compensation, they use different tactics, including:
Lowballing Repair Costs
Most insurers offer repair settlements far below the actual costs of damages, forcing you to either cover the differences or accept low-quality repairs.
Blaming Pre-Existing Damage
This is a favorite trick among insurance companies to reduce claim payments. For example, assume your roof is damaged in a storm. When you file a claim, your insurer insists the damage was caused by poor maintenance, not the storm, and refuses to pay.
Delaying the Claims Process
Many insurers deliberately delay the claim process
to force you to accept a lower settlement out of frustration. They may demand excessive paperwork, among other things, so that you abandon the claim.Your Rights as a Policyholder
Dealing with a shady insurer is draining and can affect your mental health. Fortunately, you have the right to fight back. Here are some laws that can protect you as a policyholder.
Right to Refuse an Offer
You don’t have to accept everything the insurance people throw at you, especially if it’s too low or doesn’t cover your damages. More often than not, insurers start with low offers, hoping to trick you into accepting them. For example, an insurer may offer a $3,000 settlement when you’ve suffered losses of $10,000.
Right to Access Claim Information
You should know everything about your claim. This includes information like your settlement offer and policy coverage. For example, do you understand how the insurer calculated your claim? If you don’t, you can ask for a breakdown.
Right to File a Complaint
If you suspect an insurer is doing something shady, you can report them to your state Department of Insurance. The government will take over the case and ensure you get fair treatment.
Steps to Take If Your Insurance Claim Is Underpaid
Not all insurance companies are bad, but the majority will try to take advantage of you. If this happens, follow these steps.
Review Your Insurance Policy
Carefully go through your policy to understand the little hidden details like its limits and exclusions. This will help you understand if you’re eligible for a payout and how much is an ideal amount.
Document All Evidence
Collect all the information concerning your insurance claim. This includes photographs or videos of the damage, repair estimates from independent professionals, and all communications with your insurer. Having these detailed records will help your case in case of any misunderstandings.
Gather Independent Estimates
Don’t simply trust your insurer’s estimates. They will likely be lower than the market rates. Instead, get unbiased estimates from contractors, mechanics, or appraisers. Their figures will likely be closer to market rates than your insurers.
Negotiate With Your Insurer
If you suspect you’re getting a raw deal, you should negotiate with your insurer for a better settlement. Most insurers will offer better rates once they realize you aren’t falling for their lowball offers.
File a Complaint With Regulatory Authorities
If talking to the insurer becomes hard, you can opt for your issue to be solved by a neutral party; your state’s Department of Insurance. They will investigate your case and may even force the insurance company to offer better settlements if they’re in the wrong.
Consider Legal Action
If your insurance company continues frustrating you, it may be time to use the legal route. Consider getting a lawyer specializing in insurance disputes to sue their insurance company for underpayment or bad faith. This may force the insurance to review their offer.
Fight for a Fair Insurance Payout
Insurance is meant to protect you during the hard times. Unfortunately, many insurance providers are using underhand tactics to underpay their clients. If this happens to you, try to negotiate for a better deal. The state Department of Insurance and court are also viable options if everything else fails.
