Despite everyone’s best efforts, a policyholder and his insurance company will sometimes disagree regarding the outcome of a filed claim, particularly the amount of money paid. These differences of opinion are often based on:
- Coverage: There may be dissent about whether the loss or property is covered under the policy.
- Scope: One party may believe there’s more damage to the property or greater repairs needed to put the policyholder back into a pre-loss position than the other.
- Valuation of loss: This is the amount of compensation the insured is entitled to receive under the policy. In this instance, one party may think the cost of repair or replacement, or the dollar or value of the claim, is larger (or smaller) than the other.
As the operator of a self-storage business, you may find yourself in any of these situations. Fortunately, there are ways to engage your insurance company in discussion and negotiation. Following are some steps you can take to strengthen your case and move a claim dispute toward resolution.
Explain the Issue
Your first step should be to explain your problem to the insurance company. A phone call is fine, but it’s extremely important to follow up in writing. Clearly detail the issues you have with the claim decision and state the action you want the company to take. If you believe the evaluation of the loss is based on incorrect information, express this explicitly and provide specific reasons why.
Gather Evidence and Support
Next, collect any documentation that’ll help your case and provide copies to the insurance company. The type of evidence required will depend on the type of dispute. For example, let’s say you don’t believe the insurance company’s estimate for a repair represents the true cost, either because it’s too low or the details aren’t accurate. Perhaps it contains incorrect square footage or is based on the wrong type of building material. Pointing this out and providing the correct information is a good step toward resolution.
It may also be appropriate to identify experts who can help support your position. For example, you may want to have a contractor provide a genuine repair bid or an engineer determine the cause of the damage. In some instances, you may need to ask your accountant to help you present your business-income claim.
Don’t be afraid to contact your insurance agent. Agencies often have an employee dedicated to helping clients navigate the claims process and advocating on policyholders’ behalf.
Request a Response, Get Clarity
Once you’ve done the above, ask that the insurance company respond to you within a specific time frame. Just don’t be extreme, such as making a same-day request. Provide a reasonable date, then put it on your calendar for follow-up.
Also, don’t be afraid to ask questions or request additional explanation if necessary. If you don’t understand something, get clarification!
Consult Your Policy
Look closely at your policy. Does it provide a mechanism for resolving disputes, such as an appraisal or arbitration clause? If so, determine whether it’s appropriate to use based on the circumstances.
Appraisal is a policy provision used when the policyholder and insurance company disagree on the amount of a loss. It doesn’t typically include procedures for resolving a dispute over whether a certain type of property or loss is covered under the policy. However, arbitration may provide a process for resolving valuation and coverage issues in a single setting.
Consult Legal Counsel
Even after taking the above steps, there can still be a difference of opinion. In these cases, you may need to involve an attorney who’s knowledgeable about self-storage insurance. A qualified legal representative can convey the carrier’s position and help determine if it’s correct. This person can also advise on any next steps, which could include appraisal, arbitration, another form of alternative dispute resolution (such as a mediation), or potentially a lawsuit.
Dispute in Action
Let’s walk through this process in the context of a real-life claim. Shortly after a hailstorm, Bob notices roof damage at his self-storage facility. While both parties agree the roof needs to be replaced, they disagree on the reason. Bob believes the damage is the result of hail; but the insurance company concludes that while some portions of the roof need minor repairs due to hail, the replacement is required due to age. This is a pre-existing condition and not covered due to the hail event. Thus, the provider declines coverage for the cost to replace the roof and instead offers a small settlement for the repairs.
To contest the decision, Bob should contact the insurance company and ask for any reports or photographs on which the decision was based. He should then provide any information he has to support his argument. His submission could include photographs, reports or statements from a qualified engineer or roofing contractor.
Bob can also request that the insurance company re-inspect the roof while his expert is present. In addition, he should make a formal, written request for the insurance company to reconsider its denial of the roof-replacement claim.
Receiving a disappointing decision from your insurance company isn’t necessarily a dead end. Stay involved in the claims process. Ask questions, listen to different opinions, and gather any information that can help lead toward a satisfactory resolution.
Tia McClure is company counsel, compliance officer and head of product development for Deans & Homer, an insurance-managing underwriter providing specialized coverage for the self-storage industry since 1974. A licensed California attorney since 2001, Tia has been with the company since 2002, beginning as claims counsel. She served as head of its claims department for about 10 years. To reach her, call 800.847.9999; email tia@deanshomer.com.
