Dealing with the Unexpected: Filing an Insurance Claim
It’s that moment that no homeowner wants to have. You just returned from vacation and was in the midst of stowing the suitcases under the house in your crawlspace. As you were exiting the crawlspace something caught your eye—a wet spot on the concrete slab floor. It wasn’t a puddle, but it was clearly moisture.
Hoping for something minor, you began to poke around. During your search you discovered that a portion of insulation in between the floor boards was soaked. When you removed that you found the problem, or at least, the manifestation of the problem. A water leak was dripping down a vertical pipe in between my walls.
Unfortunately, every homeowner will have to deal with a situation like this at one time or another. Fortunately, we have insurance for these very situations, though, knowing what to do and how to handle this situation will make a world of difference to both your mental health and to your wallet.
The first thing you want to do before contacting your insurance company is to dust off that homeowner’s policy and give it a read. The typical policy is comprised of a declarations page, coverage terms and conditions, and exclusions. The declarations page is basically the summary of your policy. It will identify the policy number, policy period, limits of coverage, and list any applicable endorsements and exclusions. While helpful for a quick glance, the meat and potatoes of the policy are in the coverage section and exclusions. Read these sections closely to understand what events are covered and what events may be excluded. It’s important to have this basic understanding of your homeowner’s policy before you call your carrier, because while you pay for insurance, there is the possibility that you may be in for a fight.
Once you contact your insurance carrier you will be assigned a claim number and an adjuster. The adjuster’s role is to ascertain the “who, what, when, and how” of your insurance claim, and he/she will ultimately decide how much the carrier is willing to pay out for your loss. The adjuster will likely schedule an appointment with you to visit your home and inspect the leak and resultant damage. The process from here goes essentially as follows: the carrier will have its own contractor inspect the damage and provide a quote to repair. This quote will be the basis for any payout you will receive. However, it is important that you also obtain your own quote. This will be essential if there is a dispute over the scope of repairs and/or the amount of insurance proceeds you will recover.
Depending on the position taken by your carrier and the size of the claim, it may become necessary to retain legal counsel to ensure your rights are protected. Many times insurance carriers will deny claims that should be covered or offer payouts that simply do not reflect your damages. Sometimes simply bringing in counsel to assist with the claim process will be sufficient. Other times it may be necessary to file a legal action called a declaratory judgment action.
The purpose of a declaratory judgment action is to have a court of law rule on the scope of coverage of an insurance policy and the insurer’s obligation to you as the homeowner. Actions such as these are fairly straight forward, require little in the way of discovery, and can typically be completed in a year or less.
Moreover, if you have a legitimate claim that was denied by your carrier, and you are successful in your declaratory judgment action, under New Jersey law you are entitled to recover the costs you incurred in litigating the coverage dispute.