For those unfamiliar, the insurance claim process is quite confusing. Here, we bring a scenario involving a homeowner’s desire to have a claim processed along with the most common questions posed to professionals. We hope that through the dissipation of these along with the answers, the issue will be clarified and the process will not be seen as daunting.
How would a leading insurance company handle a homeowners claim regarding payment?
A: We are providing an example of some of the major companies here. In the event that a home damage claim is filed, the company will request a repair estimate. Immediately after receiving the quote, the company would issue a paycheck. In certain cases, when additional living expenses or temporary repair work is necessary for safety reasons, the insurance may even pay in advance 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 mandated by the government in regards to a large loss. The reason behind this is quite simple: due to the insurable interest the mortgage company has in repairing the house, the payment is issued to them. In order for the insured to receive financing, he must be in contact with the mortgage company.
The estimated cost of repairs was higher than the actual payment, why is that so?
A: In cases like this, the reasoning behind it follows the fact that the homeowner must first pay their out-of-pocket deductible before any payment from the insurance company is made. The deductible is then subtracted from the remaining balance of payments.
What are the variables that insurance companies use to determine if a house needs repairs instead of reconstruction?
A: The insurer 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 a significant risk to the structure, the insurance company will decide to rebuild the house instead of repairing it.
In the event that a house is deemed necessary to be rebuilt, does it have to be rebuilt in exactly the same way as before it was damaged?
A: If the insured wishes to add any changes to the building, they may do so. The insurance company pays for the restoration of the house and the policyholder pays for the additional costs of the updates.
In the event a home is deemed not to be 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 relocate to a comfortable hotel. In the event that home repairs are prolonged, the insurance company will help relocate the family to temporary housing that has similar amenities to the previously damaged home.
Will the policyholder be denied temporary living coverage over time?
A: The policyholder can expect to be covered for temporary housing for the duration of the repair work on the damaged home. This applies even if the term of the homeowner’s policy has expired.
What does an insurance company do about protecting a home’s contents during the time it takes to repair a home?
A: The insurance company bears the transportation and storage costs during the repair period.
These and any other questions related to the homeowners claim process should be directed to an experienced independent agency.