Understanding Policyholder Obligations After a Loss

Experiencing property damage is stressful enough without the added burden of dealing with insurance companies that delay, deny, or underpay claims. Public adjusters, who exclusively represent the interests of policyholders, play a critical role in ensuring fair compensation. However, consumers—whether they are owners, property managers, facility managers, or contractors—need to be informed about the tactics insurers use to minimize payouts.

Public adjusters work solely as first-party property damage adjusters assisting claimants in receiving the full payout they’re entitled to and advocating on behalf of the policyholder—not the insurance company. This article aims to educate you on navigating your insurance policy and claims process, providing an overview of insurer tactics and the rights you have as a policyholder. Remember, insurance carriers are notorious for denying, delaying, and underpaying claims, a practice that consumer advocacy groups like the American Policyholder Association (APA) and the National Association of Public Insurance Adjusters (NAPIA) have long fought to correct​.

The Reality of Insurance Claims

The National Association of Insurance Commissioners (NAIC) reports that policyholders frequently encounter less than Good Faith claims handling, where insurers fail to act in good faith during the claims process. Authors like Jay M. Feinman, who wrote Delay Deny Defend, and Chip Merlin, author of Pay Up!, have exposed how the industry prioritizes profits over policyholder rights. These resources highlight just how critical it is to have a firm understanding of your insurance policy before disaster strikes.

Key Documentation for Your Insurance Claim

After a loss, you must immediately begin documenting everything. This includes taking clear, time-stamped photos, creating an inventory of damaged items, and providing proof of ownership—whether through receipts or valuations. Complying with policyholder obligations under their policy is key to securing a proper payout. Some of these obligations include "protect the property from further damage", "separate damaged from undamaged property", and "provide a sworn proof of loss with detailed specifications of the damaged property, along with the estimate to repair or replace showing the ACV value of the property". Most of the insured's obligations are difficult, if not impossible, for the property owner to complete.

All Business and Homeowners policies have specific language in the policy under a section called "Duties After a Loss" or similar language. If you, as a policyholder, do not complete these requirements, the insurance carrier has no obligation to adjust, let alone, pay your claim. Bill Wilson, a policy and coverage interpretation expert, emphasizes that understanding the fine print of your policy can significantly affect the outcome of your claim. For instance, insurance policies often contain numerous exclusions, and unless you have comprehensive knowledge of these clauses, you risk having your claim underpaid or denied entirely.

Understanding Claim Procedures

One of the first steps after experiencing a loss is notifying your insurer. Many policies require immediate reporting, so failing to do this could jeopardize your claim. Once you’ve reported the damage, an insurance adjuster will assess the property. However, it’s crucial to remember that these adjusters work for the insurance company, and their primary goal is to minimize the payout.

If you’re offered a settlement that feels unfair, you have the right to negotiate. This is where having a public adjuster, like Velocity Public Insurance Adjusters, can make a world of difference. Public adjusters are skilled at identifying the true extent of your losses and pushing back against lowball offers from insurers. Chris Voss, a former FBI hostage negotiator and negotiation expert, emphasizes the importance of remaining firm and backing up your claims with evidence during negotiations.

Dealing with Claim Denials and Underpayment

Even when policyholders meet all the documentation and procedural requirements, claims are still often denied or underpaid. Insurers might cite policy exclusions or technicalities to justify denying coverage. David Skipton, author of The Claims Game, outlines how insurers use deceptive tactics to reduce the amount they owe.

Should your claim be denied, don’t lose hope. You have the right to appeal the decision. The first step is understanding the specific reasons for the denial and gathering additional evidence to support your case. Chip Merlin’s Pay Up! explores how policyholders can fight back and hold insurance companies accountable for less than Good Faith practices.

Protecting Your Rights as a Policyholder

The APA and NAPIA are powerful advocates for policyholders, working to hold insurers accountable for unfair practices. Both organizations emphasize the importance of hiring a public adjuster to help level the playing field between policyholders and insurance companies. Public adjusters are well-versed in the complexities of insurance policies and can help you navigate the claims process to ensure a fair outcome.

Ensure You Receive What You’re Owed

Navigating the insurance claims process can feel daunting, but you don’t have to do it alone. If you’re an owner, a property or facility manager, a commercial contractor, or a real estate broker dealing with property damage, educating yourself on your policyholder rights is crucial to ensuring a fair settlement. At Velocity Public Insurance Adjusters, we offer free claim and policy reviews to help you understand your coverage and ensure that you’re not shortchanged. Contact Velocity Public Insurance Adjusters today for professional assistance and take the first step toward securing the full insurance payout you deserve!