A Policyholder’s Guide to the Insurance Claims Process
This article is for anyone who owns property covered by insurance, including renters who insure their personal property. When a loss occurs and your property is damaged, approaching the claims process in an informed and organized manner will increase your chances of the claim being resolved quickly and to your satisfaction. Additionally, Texas has laws to protect policyholder’s and strict timelines by which an insurance company must comply when handling your claim.
Promptly notify your insurer of the loss
Notify your insurance company as soon as you discover the damage from the loss. Prompt notice of loss is required by most policies, although what is “prompt” is a usually a fact issue—meaning it is arguable on a case-by-case basis. Some policies now require that notice of a loss must be given within one year of the date of loss. Once you have notified the insurance company of the loss, it has fifteen days to acknowledge your notice, commence an investigation and request and documents it may need for its investigation.1
Document the loss and every contact with your insurer and/or its adjuster
Document the damages caused by the loss with photographs or video. Once you have notified the insurance company of the loss, it will usually send an adjuster to inspect and document the damages. However, it is important to keep your own documentation as well. Do not dispose of damaged property until your insurance company has inspected the property or declined to do so.
As well, document all communications with the insurance company and its adjuster. Most insurance companies keep claims diary notes which include communications with the policyholder, so having your own “claims diary” and documentation may be helpful if a dispute later arises as to representations made to you or as to the extent of the damages.
Mitigate your damages – protect your property from further damage
In Texas, a policyholder is required to mitigate damages at “trifling” expense. This means that you must do what you can afford to do to keep any of the damages from getting worse. Examples of mitigation are placing a tarp over a hole in your roof or shutting off the water supply to your building when a pipe has burst.
Cooperate with reasonable requests for documents and inspections
Within fifteen business days after conducting its investigation, the insurance company must notify the policyholder of its decision to pay or deny the claim, or whether it requires more information in order to make its decision.2 If it decides to pay on the claim, it must do so within five business days.3
Most policies require the policyholder to allow the insurance company reasonable access to inspect the damages and to comply with reasonable requests for documents, such as receipts or invoices. The insurance company may hire experts, such as engineers or building consultants, to assist with the claims investigation. This may require more than one inspection of the damages. As long as the requests are reasonable, a policyholder should comply.
If the insurance company has required more information, it must pay or deny the claim within forty-five days after such notice.
Beware of the same-day claim payment
While the idea of having the adjuster cut a check on the same day he or she has inspected the damages sounds great, a quick turnaround sometimes results in under-scoping and thus, underpayment. While it is the insurance company’s responsibility to conduct a full, fair and prompt investigation and estimation of your claim, a policyholder has a right to get bids from local contractors to make repairs. Don’t be rushed by the insurance company, and certainly question the adjuster’s opinions if necessary.
Beware of releasing and/or waiving your rights
Once an insurance company has made a decision of what it believes is owed under the policy, it must make an undisputed claim payment. It is a violation of the Texas Insurance Code for an insurer to ask a policyholder to sign a release of liability or a waiver of rights in order to receive an undisputed payment of policy benefits.
If an insurance company claims that some of the claim payment is actually disputed, it may have a right to ask for a release. However, never sign a final settlement, release of liability, or waiver of rights without fully understanding the document and consequences of signing it. In most cases, you are waiving your legal rights to later seek the full amount of the damages which should have been covered by your policy.
Ask for help
If at any time during the claims process you feel you are not being treated fairly, contact
the Texas Department of Insurance, a public adjuster or, as a last resort, an insurance attorney who specializes in representing policyholders.
- Some large properties are insured by a surplus lines carrier, and the deadlines are different. A surplus lines carrier has thirty business days. Check the declarations page of your policy or call your agent to be sure. ↩
- It is also fifteen days for a surplus lines carrier. ↩
- Twenty business days for a surplus lines carrier. ↩