Why Homeowners/Fire Insurance Claims Are Denied
Homeowners insurance claims must be paid when the policy covers the cause of the damage. Many policies exclude (do not cover) damage caused by earth movement, rain and floods, mold, negligent construction and design, and other common events. Sometimes, an insurance company offers only partial payment and denies what exceeds the policy limits. An experienced claims attorney will look at the policy, the facts, and the applicable law to determine if the claim denial is valid. The attorney’s investigation will likely include these questions:
- When the homeowners bought the policy, did it exclude coverage for the event that caused the damage? If not, did the insurance company later give the homeowners “clear and conspicuous notice” that it was adding the exclusion? If the homeowners did not know about a later-added exclusion because they did not get legally sufficient notice, the exclusion cannot be enforced, and the claim must be paid.
- How much of the repair and / or replacement costs does the policy cover? Does it cover other costs, such as temporary lodging during repairs? Does the policy comply with California law? If the homeowners bought “full replacement coverage” and the company reduced the coverage amount later, the question is the same as above: did the insurance company give the homeowners”clear and conspicuous notice” that it was reducing coverage? If the policy violates the law, or an exclusion was added without sufficiently conspicuous and understandable notice, the insurance company must pay the claim.
- What caused the damage? Damage to your home may be caused by a combination of a “covered event” (such as a burst water pipe) or an “excluded event” (such as earth movement). The insurance company must pay the claim if the covered event was the “predominant” cause of the damage. The homeowners and the insurance company both may need to hire scientific damage experts to evaluate the cause of the loss.