A home is usually someone’s biggest investment, so they want to protect it. Those with a mortgage will have no choice but to carry homeowners insurance, and many others will purchase a policy to protect themselves against liability or the possibility of property damage caused by severe weather or criminal activity.
A homeowners insurance policy can help someone repair damage to their property and can also help them cover the cost of alternative living arrangements if their home is uninhabitable. When someone needs a new roof after a tree comes down in a storm or repairs for water damage, they will usually rely on their homeowners insurance to cover their costs.
When an insurance professional offers a settlement in response to a sizable homeowners insurance claim, people often accept the settlement and cash the check. They assume that the offer is the best option that they have available. What they may not realize is that offering lowball settlements is a common tactic employed by insurance companies.
Settlements end business liability
Offering a settlement quickly and for less than the maximum amount of coverage allowed for under the policy can be very beneficial for the insurance company. If someone accepts a settlement offer, they will typically sign documents that absolve the insurance company of liability for any future losses or expenses. The company can then essentially guarantee that the claim costs will not reach the policy limit.
Rather than seeking to ensure that someone receives exactly what they need to get their home back into optimal condition, the company may instead attempt to reduce what it pays so that it earns as much money as possible. Homeowners, eager to start repairs on their home or pay off the loans they took on to cover the costs themselves sometimes make a mistake of readily accepting a settlement without comparing it to the likely total expenses that they will incur.
It may only be when the funds run out and there are still repairs or work needed that people realize the insurance company did not offer them enough. In some scenarios, those who have already accepted a lowball settlement can take action against an insurance provider for acting in bad faith. The process can be quite lengthy but can help people obtain the coverage they deserve.
Ideally, policyholders will have assistance when pursuing a large claim so that they can avoid mistakes that will lead to major losses. Reviewing a settlement offer carefully and estimating the total impact of property damage may help someone navigating a large claim get what they actually deserve from their coverage.