Understanding the full coverage and limitation of your homeowner’s insurance policy is key in avoiding the possible denial of a claim you might file later.
If you’re getting ready to file a claim and don’t want it returned with a big red “DENIED” stamped on the front, then it’s important to go through your contract with a fine tooth comb and ensure that your claim isn’t going to fall into the following denial cases.
1. Your Claim Could Be Marked “Negligent”
Let’s say that your home has had a bit of a termite problem that you’ve been meaning to take care of, but unfortunately, the latest monster hurricane decided to take out your roof before you got the chance. When the insurance company conducts their investigation, and discovers that there was a pre-existing termite problem that contributed to the fall of the roof, your claim will be denied.
Sadly, the hurricane might have taken out your roof anyway, but there’s no way for the insurance company to know that and the homeowner is held liable for any “negligent” conditions.
2. Your Claim Was Included in the “Exclusion Clause”
Within your homeowner’s insurance policy there’s an “Exclusion Clause”, which outlines everything that the insurer will not cover. Most commonly, occurrences such as flood damage and earthquake damage are not covered under a standard policy; these are considered add-ons that you have to pay extra for.
3. Your Claim Exceeds Your Allotted Coverage
Detailed within your policy are limits of liability on items that are associated with the overall homeowner’s insurance policy. These items are possessions within your house (i.e. rare coins, cash, jewelry, etc.) that are insured under the policy but only up to certain amounts.
For example, if your policy allows for up to $1,500 of coverage for your collection of jewelry, but your entire $5,000 collection was destroyed, you can only claim up to $1,500 worth. If you try to claim higher, the entire claim will be denied.
To obtain coverage for the full wealth of possessions in your home, you will need to acquire separate riders to increase coverage.
4. You Lied On Your Insurance Application
As soon as you file a claim, your insurance company will immediately go through your initial application with a fine tooth comb and cross-check it against all incoming documentation and investigation results. If it is discovered that you in any way provided false, or exaggerated, information your claim will be denied and your policy rescinded.
Furthermore, if your policy is rescinded, you may be sued by the insurer, if they’ve previously made any payouts to you, for the amount of those payouts.
5. You’ve Failed to Pay Your Premiums
If you’ve failed to make your premiums, or are currently late on paying your last premium, there’s a good chance that your claim will be denied. This is ultimately up to the insurer, and in some cases, appeal can overturn a denied claim, but usually, it will result in claim denial.
It’s important to remain as truthful as possible when dealing with your home insurance provider, this will benefit everyone in the end. The most reliable way to ensure you’re dealing with a reputable company, like HBF, if to only concern yourself with established & trustworthy companies. Shop around for advice & speak to family or friends before rushing into any contracts.
Good information. I’ve been a homeowner for almost 15 years and have luckily yet to have to file a claim. Let’s hope it stays that way, because even though things are covered, you know when you do file a claim, the rates will get jacked up and they’ll make their money back.
I had a disaster in the house and the insurance sent people over to examine the damage. Since it’s an older house (built in 1950), the first thing they did was to probe for asbestos and other nasty chemicals. Fortunately, nothing was found; good thing too because the insurance will refuse to cover the cost of those things!
Failing to pay your premiums or lying on your insurance application are totally understandable reasons to have your claim denied. If I needed a homeowners insurance policy, I’d want to be sure that the application is done properly, and that I’m paying what I need to. The last thing I’d want to do is cause issues with the company that will cover damages if I need it.