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2 ways insurers undervalue water damage claims
February 25, 2023
Water damage is a significant problem for property owners. It’s probably no surprise that water damage, when you combine both the weather-related kind and the non-weather kind, accounts for
31% of all homeowners insurance claims
Unfortunately, many unsuspecting homeowners end up accepting settlements that are woefully inadequate for their needs – and the insurance companies know it. After all, insurance companies exist to make a profit far more than they exist to protect your property.
How do you spot the red flags that indicate your insurer is trying to lowball you or is acting in bad faith? Here are some signs:
1. The property inspection is superficial, at best
The insurance adjuster is supposed to visit the property and assess the damage. If they barely glance at the watermarks on your walls and don’t address the issue of hidden damage that’s lurking beneath the surface, the odds are high they’re going to offer just enough to make cosmetic repairs – which can leave you with hidden time bombs behind your walls. You need to make sure that any inspection for water damage
takes into consideration
the problem of mold that may be growing behind the surface and remediation costs. Electrical issues, too, might be a concern.
2. The dollar estimates seem very low
Sometimes insurers will try to tell you that they’ve received estimates for the repairs that seem unreasonably low, and they may not reflect the reality. It’s usually wisest to get an independent estimate on your own (or even three), so you can challenge the insurer’s figures.
Similarly, you need to be on the alert for offers to replace your lost property with its actual cash value instead of replacement costs. The actual cash value is what an item would be worth secondhand, not what it costs to replace it.
It’s frustrating to feel like you’re getting the runaround by an insurance company, especially after you’ve faithfully paid your insurance premiums for years. When the insurance companies start talking about “lack of coverage,” it may be time to get some experienced legal guidance.