For those of you unfamiliar, the insurance claim process is quite confusing. Here, we present a scenario involving an owner’s desire to have a claim processed along with the most common questions that are posed to professionals. We are hopeful that through the dissipation of these along with the answers, the issue will become clear and the process will not be considered overwhelming.
How would a leading insurance company handle a homeowners claim regarding payment?
A: Here is an example from some of the top companies. In the event of a home damage claim, the company will seek a repair estimate. Immediately after receiving the estimate, the company would issue a paycheck. In certain cases, where additional living expenses or temporary repair work are necessary for safety reasons, the insurance may even make advance payment for the emergency situation.
It is common to see the claimant’s mortgage company written on the paycheck. Why is this so?
A: This practice is a government mandate with respect to a great loss. The reason behind this is quite simple: Due to the insurable interest the mortgage company has in the home repair, the payment is issued to you. In order for the insured to receive financing, they must be in contact with the mortgage company.
The estimated cost of the repairs was higher than the actual payment, why is this the case?
A: In cases like this, the reasoning behind this is based on the fact that the homeowner must first pay their out-of-pocket deductible before receiving any payment from the insurance company. The deductible is then subtracted from the remaining payment balance.
What are the variables that insurance companies use to determine if a home needs repairs rather than rebuilding?
A: The insurance company first consults with a professional engineer or construction specialist regarding the risk factor involved in the repair work on the safety of the building. If there is significant risk to the structure, the insurance company will decide to rebuild the house rather than repair it.
In the event that a house is deemed necessary for reconstruction, does it have to be rebuilt in exactly the same way it was before it was damaged?
A: If the insured wishes to add any changes to the building, they can do so. The insurance company pays for the restoration of the home and the policyholder pays for the additional costs of the improvements.
In the event a home is deemed not uninhabitable, what does the insurance company do for the insured homeowner?
A: If the damaged home is classified as uninhabitable, the insurance company will likely help the owner’s family move to a comfortable hotel. If the home repairs take a long time, the insurance company will help move the family to a temporary home that has similar amenities as the previously damaged home.
Will the policyholder be denied term life coverage over time?
A: The policy holder can expect to be covered for temporary housing during all repair work on the damaged home. This applies even if the term of the owner’s policy has expired.
What does an insurance company do about protecting the contents of a home during the time it takes to repair it?
A: Transportation and storage costs are covered by the insurance company during the repair time period.
These and any other questions related to the homeowners claim process should be directed to an experienced independent agency.