Why Do Insurance Companies Underpay Property Damage Claims?

Over the last 75 years, more than 150 major disasters have occurred in Florida. The state sits between the Atlantic Ocean and the Gulf of Mexico, so it's susceptible to hurricanes, tropical storms, and flooding. Property insurance is, therefore, an absolute must for Florida home and business owners.

Unfortunately, property insurance doesn't always cover the costs of damage to a home or business. If you've filed a claim with a property insurance company and been lowballed by them, you may need to hire a Florida bad faith insurance attorney to represent you. Bad faith insurance lawyers can hold insurance companies accountable in these cases.

Before doing this, though, discover why some insurance companies underpay property damage claims in the first place. 

They Interpret Insurance Policies Differently Than Customers

A recent survey revealed that about two-thirds of American homeowners don't know what their home insurance policies cover. They often leave it up to their insurance companies to tell them what's covered once they've filed a claim — and this doesn't usually bode well for them.

Whether you know what your property insurance policy covers or not, your insurance company may interpret its terms and conditions differently than you do. Their interpretation may lead to them underpaying for a property damage claim you put in. It might force you to consider calling on a Florida bad faith insurance attorney for assistance.

They Underestimate the Damage to Customers' Properties

Insurance companies send adjusters to properties to examine property damage claims from their customers. These adjusters are ultimately in charge of determining the scope of the damages and what it will cost to fix.

In some instances, property owners and insurance adjusters won't come anywhere close to landing on the same page. An insurance adjuster might not think your property is in that bad of shape or unilaterally determine that some or all of the damage was due to an exclusion or something other than the reported cause of loss. 

This disagreement could lead to your insurance company denying or underpaying for a property damage claim. It could also make it important for you to find a law firm to handle a bad faith insurance case.

What Happens if Insurance Doesn't Pay Enough?

When an insurance company fails to pay enough in a claim, policyholders are left in a difficult and often frustrating situation. This can happen for various reasons, such as undervaluing the claim, denying coverage, or processing errors. When the insured party faces an insufficient payout, they may have to cover the remaining costs out of pocket, leading to financial strain and uncertainty.

Policyholders have several options to seek fair compensation in response to this issue. They can appeal the insurance company's decision, provide additional documentation and evidence to support their claim, or even seek legal assistance. Additionally, policyholders can explore options such as mediation or arbitration to resolve the dispute outside of the court system. Ultimately, it is crucial for individuals to be proactive in advocating for themselves and their rightful coverage to ensure they are adequately compensated in the event of an insurance claim.

They Overemphasize the Depreciation of Customers' Properties

If property becomes damaged within your home or business, you might start calculating how much it will cost to replace it to give yourself an idea of what you can expect from your insurance company. But there's one big problem with doing this: Your insurance company might tell you the damaged property was worth much less than you'll have to pay to replace it due to depreciation.

Depreciation refers to the value property loses as it ages and shows signs of wear and tear. This depreciation can create a huge discrepancy between what you believe the property is worth and what your insurance company says they'll give you for it.

If you suspect your insurance company might be using depreciation to avoid paying you the proper amount for a property damage claim, contact a Florida bad faith insurance attorney. They can evaluate your case and tell you if you have a leg to stand on in court.

Call Us To Speak With an Experienced Florida Bad Faith Insurance Attorney

In a perfect world, insurance companies would always provide customers with the appropriate payments after they file property damage claims. But this is, of course, not always how things shake out. Insurance companies have teams of actuaries who calculate risks to help maximize profits for insurers. Insurance companies routinely maximize their profits by underpaying claims with the hope that their insured will not dispute their position. Insurance premiums for Floridians continue to rise to historical amounts. Don’t allow your insurance company to underpay what you’re owed. 

Warner & Fitzmartin can serve clients who want to fight back against their insurance companies when they underpay property damage claims. The estimates prepared by insurance companies can be very confusing and difficult to comprehend. If you have questions about your property damage insurance claim, call the attorneys at Warner & Fitzmartin at (561) 821-3098.

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