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Underpayment of insurance could be as problematic as a denial

On Behalf of | Jun 3, 2022 | Property Damage Insurance Claims |

Insurance companies have to consider every case that they get and decide if they’re going to pay out the policy or not. When a homeowner’s dwelling suffers damage, they will probably file a claim to get the damage fixed, and the insurance company will then send an adjuster to see if the damage was covered under the policy and how expensive it will be.

There are good faith rules for operating under this system. For instance, insurance companies are not allowed to refuse to make payments when the damage is clearly covered under the policy and they’re contractually obligated to make those payments. In some cases, insurance companies may issue denials for no reason or they may simply operate in bad faith by making it difficult for you to process your claim.

But this isn’t the only issue you might face. If they underpay you, there are situations in which that could be almost as problematic as if they didn’t pay you at all.

What is the real cost of a roof?

For instance, say that your roof is damaged. This is leading to more damage to the interior of your home. You file a claim so that the insurance company will pay for a company to put a new roof on your house.

However, the average cost of a roof replacement is different in every instance. It could be as low as $5,000 or as high as $12,000. The average is right in the middle at about $8,000, but those with large homes could be looking at $20,000 or even more. Every case is unique.

If a roofing company gives you an estimate of $12,000, and then the insurance company only pays you $5,000, the roofing company is simply not going to be able to take on the job. The insurance company may say that they paid out the claim and they have fulfilled their obligation, but you’re still in a situation where your home is just as bad off as if they had done nothing. Plus, the damage inside is just going to get worse every time that it rains.

The costs can quickly spiral out of control, and it can be very frustrating if you feel like you’re not being treated fairly. Make sure you understand what legal options you have.