My Homeowners Insurance Quote was to Low, Now What?

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The storm has passed, the damage has been done, and you’ve just received the estimate and check from your homeowners insurance company for your damages. Wisely, you passed on retaining the public adjuster because you read my other article. However, now you’ve gotten an estimate for repairs, which is higher than what the homeowners insurance company was estimating. Now what? Settle for what you have and make up the difference or pick a fight with the homeowners insurance company. This article will help by providing several variables to evaluate your estimate for repairs cost against that of the insurance company to see if indeed the estimate is fair or not. And if not, some suggestions on how to approach negotiations so that everybody is happy.

But before getting into specifics, consider a few points before placing blame on the insurance company for failing to uphold their end of the bargain. First, the company providing your homeowner’s insurance has no interest in trying to short change anyone including you. It doesn’t make business sense. That being said, it really is the intent of the insurance company to be fair in all there dealings.

Another thing worth to considering is that the insurance adjuster has a firm grasp on what the market is bearing for repair cost just because of the amount of similar losses the see on a regular basis. Claims adjuster write these estimates for property damage claims all the time and see far more losses than most contractors do. A good example is illustrated in an estimate I saw for covered electrical damages with a policyholder. His first estimate exceeded 7,000 dollars for repairs. As a claims adjuster, I was ready to write the check, but I knew from prior experiences with similar losses the estimate provided by the contractor was excessive given the damages. Together the policyholder and I worked through that 1st estimate to discover the contractors labor rate was more than three hundred dollars per hour. Needless to say, I asked him get a second estimate; that 2nd estimate came in it at just over two thousand dollars. Go figure.

If after reviewing the information above you still believe the estimate for repairs and the related check is a little small, the next few questions should be helpful in determining if you have a reasonable estimate for your covered insurance damages.

Are your expectations reasonable about the value of your claim?

Do you have reasonable expectations regarding your damages? In addition are you being that reasonable person when interacting with your claims adjuster? Nothing is worse than trying to help a policyholder who has or is neither. You’ll get nowhere fast if you approach your homeowners’ insurance adjuster irrationally or erratically when considering the cost of repairs.

Were any portions of your claim excluded from coverage?

What portions of the claim, if any weren’t covered? Do any of the estimates submitted by your contractors include time and material for items excluded from coverage? If so, what happens if you remove these items and then compare estimates again? Good examples of items typically excluded from insurance coverage are water heaters; rotted anything, or just general plumbing that needs replacing due to its age. Ask your claims adjuster if you don’t recall what wasn’t covered in your homeowner’s insurance claim.

Are the apples and oranges the same?

After taking into consideration what may have been excluded, you then need to make sure the scope of the insurance estimate is similar. Is your contractor’s estimate and the insurance companies estimate measuring the same thing and coming up with similar measurements? To help in this process, make sure your contractor’s estimate provides good details when it comes down to their measurements. Often times the measurements in the insurance companies estimate are more accurate or at least verifiable since they’re spelled out very specifically in the estimate. Being off a few feet multiplied a few times will add up in either direction. As a side note, contractor’s that deal in general numbers may need to be prodded to provide specifics for your adjuster to properly evaluate an estimate at a later time.

What about upgrades?

Does your contractor estimate have upgrades included? If so, again, make sure to compare apples to apples and oranges to oranges. Your insurance company owes for construction materials of like kind and quality. If you have Berber carpet, they owe for Berber carpet, not wool carpet if it wasn’t in place. If you had a Viking stove that was damaged in a fire, then the homeowners insurance adjuster should have a Viking stove in the estimate. But in the end, if you’re considering upgrades, go ahead and consider. Just know that the insurance company owes only for comparable products.

Are the time, material, and labor rates reasonable?

Although it’s easy to fault the insurance company first, some contractors really do try to take advantage of the situation. They do this by rushing you to complete repairs or sign a multitude of documents before you have chance to talk to your insurance adjuster about repairs. And often times this is done at the moment when you are most anxious and flustered. Any contractor should and could provide a break down of their estimate for labor, time and material. If they are unwilling, proceed with caution.

Have you taken the time to get 2nd or 3rd estimate?

Hey, if all else fails, get a second or third estimate to review. Often you’ll find yourself with better estimates if you make it known that that you’re receiving multiple estimates. One easy tip to consider is just handing the estimate provided by your insurance company to the contractor and ask whether they can do the job for the specified amount.

Okay, what’s next?

Okay, if you done all this and a difference still exist, go ahead and call your homeowners insurance adjuster. Explain why you think there is a variance if known as well as the steps you’ve taken to show the difference in price. Most times if it’s reasonable and understandable, they’ll make revisions and send supplemental payments. By taking these steps and evaluating it fairly, your insurance claims adjuster will find it easier to assist you. But in the end, if the contractor you hired really has an unreasonable estimate, your homeowner’s insurance carrier is under no obligation to revise their estimate to pay an inflated bill.