Homeowners insurance claims are denied all the time. While this can seem like a bummer at first, there are actually several legitimate reasons why your claim may be denied, and the more you know about them, the better prepared you’ll be when it happens to you! Here are five common reasons why homeowners insurance claims get denied.
1) Your item was previously damaged
One of the most common reasons why homeowners insurance claims are denied is because the item that was damaged was already damaged before the incident occurred. If you can’t prove that the damage wasn’t pre-existing, your claim will likely be denied.
You didn’t have proper coverage (six sentences):
Another common reason for claim denial is insufficient coverage. Make sure you know what your policy covers and doesn’t cover before you file a claim. Otherwise, you might be in for an unpleasant surprise.
The damage isn’t severe enough to warrant a claim (five sentences):
In some cases, the damage just isn’t severe enough to warrant filing a claim. For example, if a tree branch falls on your roof and cracks it, but there’s no structural damage, it may not be worth filing a claim over. You’ll need to make this decision based on how much you value the property and whether or not you’re willing to put up with living with the broken roof until it gets fixed.
2) The damage wasn’t caused by an obvious event
If the damage to your home wasn’t caused by an event that is listed in your policy, or if it’s not clear how the damage was caused, your claim might be denied. For example, if your home has foundation damage and it’s not clear whether it was caused by a flood or poor construction, your insurance company may deny the claim.
You didn’t have enough coverage (five sentences): If the cost to repair or replace your damaged property is more than your policy limit, your claim will be denied. That’s why it’s important to find out what your limits are and purchase additional coverage when necessary. Here’s an overview of homeowners insurance limits:
-The replacement cost of all items inside your house (everything from couches to artwork) up to 10% of the total value of your house ($250,000 for a $1 million home).
-Outdoor structures like pools and fences up to 10% of the total value of your house ($50,000 for a $1 million home).
-Money spent fixing improvements on your land up to 10% of the total value -or $10,000 for example–(depending on how much you paid).
-Outstanding mortgage balance owed on the insured property as well as taxes owed at time of disaster up to 25% or $25,000 whichever is greater.
3) The amount of damage exceeded your deductible
One of the most common reasons why homeowners insurance claims are denied is because the amount of damage exceeded the deductible. If your home sustained $10,000 worth of damage and your deductible is $1,000, then you would be responsible for paying the first $1,000 and your insurance company would pay the remaining $9,000. You have a policy with a deductible that is too high: Some policies have deductibles that are so high that it will not make sense to file a claim unless you suffer extreme amounts of damage.
4) You waited too long to file the claim.
It’s important to file a claim as soon as possible after the damage occurs. Many insurance policies have a time limit for filing, typically 60 days. If you wait too long, your claim could be denied.
The damage isn’t covered by your policy (three sentences): Before you file a claim, review your policy carefully. Some policies exclude certain types of damage, such as wear and tear or floods. If the damage isn’t covered, your claim will likely be denied.
You didn’t follow the proper claims process (four sentences): Each insurance company has their own claims process that must be followed in order for the claim to be processed.
5) Insurers can be picky about when they pay claims
- If you don’t have the right coverage, your claim will be denied. Make sure you know what your policy covers and doesn’t cover. 2. If you file a claim for something that’s not covered by your policy, it will be denied. 3. If you try to file a claim for an amount that’s more than your policy limit, the insurer will only pay out up to the limit and the rest will be denied. 4. If you wait too long to file a claim, the insurer may deny it on the grounds that it’s too late and they can’t investigate the damages. 5. If you cause the damage yourself, intentionally or not, your claim will be denied. 6. You might also get your claim denied if you forget to report a change in circumstance. For example, if you add in new pets after the fact, insurers may reject claims related to those animals. 7. In some cases, homeowners insurance won’t cover earthquake damage because most homeowner policies are specifically written with exclusions for earthquake coverage in California. 8. Some people think that if their house is destroyed by fire then their insurance company should just replace it with a new one of the same size and style – but this isn’t always true either because of the limited number of homes available in certain areas or because insurers could get stuck paying for expensive houses when cheaper ones are available nearby.