Why Your Insurance Claim is Underpaid and How Public Adjusters Ensure Fair Payouts

When disaster strikes—whether it’s a burst water line, a devastating fire, vandalism, or storm damage—property owners are often left not only grappling with the aftermath but also facing an even more frustrating battle: the insurance claims process. A startling reality is that nearly every insurance claim is either denied, delayed, or underpaid by insurance carriers. This systemic issue has left countless property owners struggling to get the compensation they rightfully deserve, with many insurance companies prioritizing profits over policyholders.

The Insurance Industry’s Less Than Good Faith Tactics

It's not just a few unlucky individuals who face this challenge. Organizations like the American Policyholder Association (APA) and the National Association of Public Insurance Adjusters (NAPIA) have long advocated for consumers, highlighting the pervasive issue of insurance companies intentionally not adhering to the doctrine of Good Faith & Fair Dealing when handling their insured’s property damage claims. These consumer advocacy groups emphasize that insurers often engage in practices that are not in the best interest of their policyholders, such as offering lowball settlements, delaying payouts, or outright denying legitimate claims.

According to the National Association of Insurance Commissioners (NAIC), insurers are regulated to handle claims under the doctrine of Good Faith & Fair Dealing, but this regulation often fails to prevent the widespread tactics insurers use to minimize payouts. Jay M. Feinman, author of Delay, Deny, Defend, reveals that insurers frequently leverage complex and vague policy language to their advantage, making it difficult for policyholders to understand their rights. This is echoed by Chris Voss, a former FBI negotiator, who notes that insurance companies often deploy sophisticated negotiation tactics to wear down claimants and force them into accepting unfair settlements.

Understanding the Reality of Underpaid Claims

An underpaid insurance claim occurs when an insurance company offers a settlement that falls short of covering the actual costs of repairs and/or replacement of damaged property. The reasons for this are multifaceted. Insurers often rely on outdated industry benchmarks, regional cost discrepancies, or lowball repair estimates to justify paying less than what is owed. As Bill Wilson, author of When Words Collide: Resolving Insurance Coverage and Claims Disputes, points out, insurers frequently interpret policy terms to suit their bottom line, rather than to fulfill the promises made to policyholders.

The problem is exacerbated by the complex and often convoluted language of insurance policies. Many property owners are unaware of the nuances of their coverage, and insurance companies take advantage of this lack of knowledge. As Chip Merlin, a leading attorney in policyholder advocacy, explains, insurers use "gotcha" provisions in policies to deny or reduce claim payouts, effectively shifting the burden of proof onto the policyholder.

Navigating the Claims Process in a Rigged System

Given this adversarial environment, navigating the insurance claims process requires vigilance and preparation. Property owners must be proactive in documenting their losses, gathering evidence, and understanding their policy's terms and requirements. David Skipton, an expert on insurer tactics and less than Good Faith claims handling practices, stresses the importance of meticulously tracking every communication with your insurer. From the moment you file a claim, it's essential to document everything—photos, receipts, repair estimates, and communications. The more organized and thorough your records, the better equipped you'll be to counteract any potential bad faith tactics by your insurer.

Despite your best efforts, insurance companies may still try to underpay your claim. In these situations, it's critical to push back. Request a detailed explanation of how the insurer calculated your settlement and compare it to your own documentation. If discrepancies arise, challenge them with hard evidence, such as independent repair estimates or third-party evaluations. Persistence is key in this process, as insurers often count on policyholders to give up or settle for less out of sheer frustration.

How Public Adjusters and Legal Recourse Can Help

When the insurance company refuses to pay what’s owed, you don't have to fight the battle alone. Utilizing the professional services of a public insurance adjuster, like Velocity Public Insurance Adjusters, often yields settlement amounts over 700% more than what insurers offer, and legal professionals specializing in insurance claims can help level the playing field. As a property owner, engaging a public adjuster ensures you have an expert advocating for your interests throughout the claims process, helping you maximize your settlement. Public adjusters are particularly effective at identifying underpayments and using their industry and policy expertise to challenge insurers' lowball offers.

Legal action may also be necessary if the insurance company continues to act in less than Good Faith. Lawsuits for breach of contract or bad faith claims handling can hold insurers accountable for their misconduct. Attorneys like Chip Merlin and Jay M. Feinman have devoted their careers to fighting for policyholders' rights, and their work demonstrates that legal pressure can force insurers to pay what’s owed. However, pursuing legal action can be a lengthy and complex process, so consulting with a specialist in insurance law is critical.

Knowing Your Rights as a Policy Holder

The insurance industry has long been plagued by practices that leave policyholders underpaid and underserved. By arming yourself with knowledge, engaging public adjusters, and/or exploring legal recourse when necessary, you can fight back against insurers who prioritize profits over their promises and obligations. Organizations like the APA, and NAPIA, and experts like Chris Voss, Chip Merlin, and Jay M. Feinman continue to advocate for consumers, ensuring that insurance carriers are held accountable for their actions.

Don’t let the insurance companies take advantage of you. If you’re facing challenges with an underpaid claim, contact professionals like Velocity Public Insurance Adjusters who serve clients in Indiana, Kentucky, Ohio, Wisconsin, Michigan, and Iowa. With expertise in property damage claims and a commitment to fighting for fair compensation, they can help you navigate this complex and often unfair process, ensuring you receive the compensation you are owed!