5 Signs Your Insurer Is Trying to Avoid Your High-Value Insurance Claim
Private insurers are for-profit companies, so their bottom lines are their top priorities. That fact impacts everything they do. The unstated goal of the average insurance company is to pay as little in claims as possible to increase profits. Often, this goal means insurers are looking for ways to deny or underpay high-value home insurance claims.
However, if you’ve purchased a premium insurance policy, you’re protected by California’s comprehensive Insurance Code. Under state law, insurers that attempt to avoid paying covered claims can face significant penalties. Below, we discuss when a policy claim is considered “high value” and five signs that your insurer is acting in bad faith and attempting to avoid paying you for your claim.
What Counts as a High-Value Home Insurance Policy Claim?
No two homes are identical, if only because they’re built on different plots of land. However, the property values of two houses of standard size, construction, and condition are often similar. That makes average properties easy to insure.
This is not true for high-value homes. Historically, a high-value house was defined as a property worth $1 million or more. As California property values steadily rise, the exact cut-off for a “high-value” property has also increased, but the idea still stands. Other features that help define whether a property is considered high-value for insurance purposes include:
- Unique location
- Custom construction
- Top-quality materials
- Personalized fixtures
- High-end appliances and smart-home features
- Substantial size
- Historic appeal
- Higher average value of furniture and contents
These properties require more protection than an average structure, so savvy homeowners often purchase expanded policy coverage. Extra benefits for these policies may include:
- Replacement cost (RC) instead of actual cash value (ACV) coverage to rebuild the property to its previous condition instead of its depreciated state
- Extended RC endorsements that increase the dwelling coverage limit to as much as 150% of normal
- Additional living expenses (ALE) protection to cover finding an equivalent temporary living situation until the property is repaired
- Landscaping protection to restore outdoor spaces
- Large loss deductible waivers to reduce the cost to the claimant after major claims
- Substantial personal property replacement endorsements to cover more expensive possessions
This coverage can be invaluable if your high-value home is seriously damaged, and you’ll pay for the extra protection through higher premiums. However, these policies can also cost your insurer a substantial amount if you need to file a claim. As a result, it’s critical to watch for signs of bad faith insurance practices intended to save the insurer money at your expense.
Five Signs Your Insurer May Be Acting in Bad Faith
Insurance bad faith occurs when a provider unreasonably fails to uphold an insurance contract through purposeful action or gross negligence. Under California’s Fair Claims Settlement Practices regulations, insurers must act in good faith when handling any claim. Signs your insurer may be violating state law by acting in bad faith include:
1. Refusal to Communicate
Insurers are obligated to respond to claims and requests for information by policyholders within a reasonable amount of time. According to Insurance Code § 790.03, “Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies” is considered an unfair insurance practice.
Typically, a reasonable amount of time to respond to a claim is about one month. Other communications, such as policy or claim questions, should be answered more quickly. If getting a response from your insurer feels like pulling teeth, they may not act in good faith.
2. Constant “Mistakes”
Insurance adjusters and representatives are human and can make mistakes. In complex claims, a few errors that are promptly addressed are not grounds for a bad faith claim. However, there is a substantial difference between quickly-fixed minor errors and serious mistakes that are not resolved.
If your insurer continually makes “mistakes,” “loses” paperwork, or “forgets” to respond or make changes you’ve requested, there’s a problem. Either the company is not acting in good faith or grossly negligent in accomplishing its duties. Both issues may be grounds for a bad faith claim.
3. Misrepresentation of the Facts
The Insurance Code states that providers must accurately present facts about claims and policies so policyholders understand their rights and options. However, companies may misrepresent these facts to avoid liability for large losses. Misrepresentations may include:
- Explaining a policy’s terms incorrectly
- Misleading a policyholder about their contract’s coverage
- Leaving out crucial details on a claim investigation report
- Understating the severity of the damage
If you believe your insurer is misrepresenting the facts of your claim, you should speak to a skilled insurance attorney immediately.
4. Alterations of the Policy
Insurers cannot alter their clients’ policies without their informed consent. Alterations can include increasing or decreasing coverage, changing monthly premiums, or adding or dropping riders and endorsements. If your policy is changed without your knowledge, you may have a right to seek coverage under the original terms.
5. Unreasonably Low Settlement Offers
Some insurers attempt to avoid paying the full value of a claim by making rapid settlement offers substantially lower than the expected costs to repair or replace. If your insurer responds to a claim too quickly or with an unreasonably low offer, you should consult an insurance attorney about your options.
Skilled Legal Representation for High-Value Home Insurance Claims
If you own a high-value home, you should take every insurance claim seriously. If you suspect your insurer is acting in bad faith or want to ensure you receive the full value of your claim, we encourage you to consult with our experienced insurance lawyers. At the Bay Area law firm of Oksenendler Law, P.C., we have decades of experience representing clients in high-value bad faith insurance claims. Schedule your consultation today to discover how we can fight for full compensation on your behalf.
