Getting It Right

Posted on February 16, 2021 by Chip Merlin

When filing an insurance claim, accuracy counts

We all like to think we’ve got more common sense than a lamp post. Hopefully, we actually do, but in many cases human behavior defies logic. For example, studies show that 50 percent of gift cards never get redeemed. Other research indicates that 75 percent of drivers think their skills behind the wheel are above average when the opposite is true.

Well, the same baffling behavior often applies when policyholders file insurance claims. The most common insurance claim mistake occurs when policyholders fail to accurately document the condition of their property prior to a loss. I can talk until I’m blue in the face about the importance of taking exterior and interior videos of homes or businesses before a loss occurs, and everybody agrees that it’s a good idea to take proactive measures to prepare for filing a potential claim. Yet, how many of us actually whip out our smartphones to take the video? Precious few.

But there are other less common insurance claim mistakes to avoid. One of the biggies is failing to accurately report the true nature of the loss to your insurance agent. Sometimes the inaccuracies are intentional, and other times they aren’t. For example, we asked a business owner if he’d ever had a case of coronavirus on his property, and he adamantly claimed that he had not. Yet, how could he know for sure? He should have said he just couldn’t answer the question.

We find that water damage losses are notorious for policyholder exaggerations. Did all that black mold come from a single roof leak during a storm, or was it because the homeowner failed to fix a long-term leak? If the homeowner intentionally makes a false report to the insurance agent, the agent will pass the inaccurate report along to the insurance company. The field adjuster would quite naturally question the validity of the claim, and a dispute could arise if the homeowner pushes back.

While we can understand the temptation to inflate a claim, it’s harder to fathom why a policyholder would deliberately underreport a loss. When a loss occurs, such as with a minor car accident, the driver may not report the damage out of fear that the insurance company will increase the premiums. That’s possibly logical, but we see property owners underreporting costly damage because they are afraid to collect the benefits they deserve.

Insurance works because the risks are spread out over a large number of policies. We’re all paying into a pot of money that will be paid to cover claims. It’s silly to not take all the benefits you paid for. The lesser amount of a possible premium increase won’t ever make up for a reduced settlement.

Document the condition of your property before a loss occurs. When you file a claim, inform your agent of all damage that resulted from the loss. You’ll receive the maximum settlement if all parties move forward with accurate information in hand.


Justice For The Policyholder

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