The point of health, home, life or auto insurance is to protect you against a sudden disaster. If your home is damaged by a wind storm, your possessions are stolen or you cause a car accident, you want to be sure you won’t have to pay thousands of dollars out of your own pocket. So what happens if your insurer doesn’t pay as much as you expected?
First, familiarize yourself with your coverage. United Policyholders, a nonprofit that educates the public on consumer insurance rights, recommends reviewing the declarations page as well as the endorsements and riders sections of your policy.
If your communication with the insurer is civil and open, you can feel confident about proceeding. However, if you have trouble understanding any of the language in your policy, or your insurer is being uncooperative, it may be time to consider professional help. There are three options.
Lawyers can be expensive, but can usually advance the discussion more quickly than you can. Keep in mind these tips from United Policyholders:
- Hire a lawyer with insurance coverage experience. If you can’t find one via referral, United Policyholders has a list of recommendations by state.
- At the beginning, limit your costs — and the hostility of the negotiations — by simply taking advice from the lawyer and speaking with the insurance company yourself.
- There may be a statute of limitations on filing a lawsuit. Although it differs case by case, assume a one-year limit and hire your lawyer at least a month before that one-year mark.
2. Public adjusters
Many adjusters work for insurance companies, which clearly is not the assistance you need in a dispute. Public adjusters are licensed by their states to work on behalf of policyholders, using their industry expertise to speed up claims, according to the National Association of Public Insurance Adjusters.
Adjusters are generally less expensive than attorneys, who likely will charge hourly rates or contingency fees as high as 30 percent to 40 percent of your recovered claim, according to United Policyholders. A public adjuster will charge up to about 15 percent, according to the Insurance Information Institute.
When hiring an adjuster, remember to:
- Meet the adjuster in person and check references.
- Check the adjuster’s license status with your state’s insurance regulator.
- Give at least three days’ notice if you’re dissatisfied with the adjuster and want to move on.
The Insurance Information Institute recommends avoiding any adjuster who solicits business door-to-door after a major disaster.
First things first: Mediators are expensive and can cost hundreds of dollars per hour or thousands per day. You also might be billed for travel and prep time, according to IDR Mediation Services in Southern California.
Both parties will have to agree to mediation for this to be a viable solution to the claims dispute. You also might need to contact a mediator if you’re involved in a fee dispute with your public adjuster.
Which option (attorney, adjuster or mediator) you should choose will depend on your case. Because attorneys and insurance adjusters can be opportunistic, check references and do some homework before you hire anyone to look out for your best interests.