Did you know that fire departments in the United States respond to a fire every 24 seconds? There were approximately 1.3 million reported fire cases in the United States last year? Unfortunately, not all of these fires were covered by insurance, leaving many homeowners and business owners unable to recoup their losses. Today we’ll discuss the reasons insurance companies deny fire claims and what to do if your claim is denied.
Insurance companies have paid $12.8 billion in fire damage claims from 2014 to 2018. A denied claim can be caused by a variety of reasons, ranging from insufficient coverage to arson investigations.
Reasons insurance companies deny fire claims
Here are the few Reasons insurance companies deny fire claims.
Denial Reason: 1) Limited Coverage:
Limited coverage is one of the most common reasons fire damage claims are denied. While most commercial property policies cover fire damage, they may only cover a part of the damages in specific situations. Policies may only cover damage caused directly by flames and not damage caused by smoke or water from fire sprinklers.
Commercial property owners must evaluate their policy for any coverage gaps to avoid an insurance carrier refusing a fire damage claim due to insufficient coverage. This allows them to ensure that they have the essential coverage in place to collect the necessary compensation for a fire damage claim.
Denial Reason: 2) Fraud or Arson:
Insurance companies frequently deny fire claims due to concerns of fraud or arson. In some circumstances, insurance companies may try to prove that the insured purposefully set fire to the business in order to make an insurance claim.
This is a frustrating strategy used by insurance companies to avoid paying claims; nevertheless, an insurer cannot deny a claim based on supposition or suspicion that the fire was caused fraudulently by arson. In some cases, the insurer may use other terminology to describe the alleged fraud such as:
- The insurer believes the policyholder or someone else set fire to the house in order to cheat the insurance.
- The fire brigade couldn’t identify the cause of the fire.
- The policyholder is falsifying or concealing information regarding a particular part of the fire damage claim.
Denial Reason: 1) Misrepresenting Fire Claim:
Insurance companies frequently dismiss fire damage claims because the claim or the cause of the fire was misrepresented.
If the policyholder misrepresented the facts of the claim to the insurance company then the company has a reason to deny the claim.
Always be forthright and honest with an insurer when submitting a claim. A carrier may be deemed to have acted in bad faith if the policyholder did not falsify the facts of the claim.
Denial Reason: 1) Failure to Take Precautionary Measures
All commercial policyholders are obligated to take reasonable steps to limit business loss or damage incase of fire. Without proper precautionary Measures you cause your claim denial.
For example, if an employee accidentally triggered a fire in a company’s break room because of outdated, malfunctioning electrical equipment, the insurer may deny the claim because the equipment had not been updated or replaced.
Policyholders can assist to avoid the irritation of a claim denial by ensuring a business is in good working order and is not exposed to any hazards that could result in a fire.
Denial Reason: 4) Late Premium Payment:
Insurance companies expect timely payments from policyholders and if you fail to pay your premiums on time you may lose your coverage or deny claim. In some cases, insurance companies may deny your claim initially to teach you some lesson for late premium payments.
Denial Reason: 5) Negligence or Intentional Acts
Insurance companies may deny your claim if they believe that you caused the fire through negligence or intentional acts. For example, if you left a candle burning unattended, and it caused a fire, your claim may be denied.
Moreover insurance companies may try to prove that the insured person purposefully set fire to the business in order to make an insurance claim.
Denial Reason: 6) Lack of Proper Evidence
Insurance companies require evidence to support your claim, including photos, videos, and eyewitness statements. If you cannot provide sufficient evidence, your claim may be denied.
So alway try to collect evidence such as pictures and videos of damage and your efforts to avoid the damage of fire.
Denial Reason: 7) Dispute Over Pricing:
Another common method used by insurance companies to prevent paying your fire insurance claim is to dispute your valuation. For example, if you claim the cost of your home based on the materials needed to reconstruct it, but your insurance company argues that it is worth far less than what you’ve claimed, you will be denied. This is just one of the many ways insurance companies try to take your money.
Denial Reason: 8) Fire alarms aren’t working.
Failure to inspect your smoke alarms may result in a fire in the home, as well as the rejection of fire insurance claim. To avoid having your claim denied, make sure your fire alarms are operating if you stated that your property contains smoke alarms when purchasing your home insurance policy.
So, you are advised to be aware of the Reasons insurance companies deny fire claims to get succesfull fire damage payout.
What to do when insurance company denies coverage?
Understand the Reason: Recognising the cause of your claim’s denial is the first step. An explanation for the refusal from the insurance provider is required.
Check Your Policy: Read the fine print of your insurance policy. Make sure you comprehend all of the rules and regulations. Verify that the denial’s justification complies with your policy.
Gather Evidence: If you think that your claim was incorrectly refused, gather all the paperwork, receipts, and other proof you need to back up your position.
Appeal the Decision: The majority of insurance providers offer an appeals mechanism. You can send an official letter to the insurance provider outlining your concerns with the claim’s incorrect denial and including copies of all relevant supporting documentation.
Contact Your State’s Insurance Department: Contact Your State’s Insurance Department: If the insurance provider continues to reject your claim, you can get in touch with the insurance department in your state. In addition to offering advice, they could be able to help resolve the conflict.
Employ a lawyer: If everything else fails, you might want to think about engaging an insurance claims lawyer. They can support you as you negotiate the legal system and defend your rights.
Mediation or Arbitration: Some insurance plans may stipulate that disputes be settled through arbitration or mediation. An impartial third party assists in resolving the conflict during this process.
Lawsuit: You might think about launching a lawsuit if your claim is substantial and the insurance provider is still unwilling to pay. However, as it can be costly and time-consuming, this should only be used as a last option.
How to get a successful Fire Insurance Claim?
Insurance companies requires detailed information about the incident and it’s your responsibility to make sure that the information you provide is complete. Here are some tips to help increase the success of your fire insurance claim.
Contact Your Insurance Company Immediately
If you have fire insurance and your property is damaged in a fire then call your insurance right away. P rovide them all relevant information, such as the date and time of the occurrence, the location, and a detailed list of the damages. Most insurance companies have 24-hour hotline where you can report claim any time.
Document the Damages
After a fire, it’s essential to document the damages to your property and possessions as soon as possible. You should take photographs or videos of the damages, including any personal belongings that were destroyed or damaged. This documentation can serve as evidence for your insurance claim, and it can help speed up the process.
Don’t Throw Away Damaged Items
Do not dispose of any damaged items until your insurance company does not see the damages. They will need to see the extent of the damage to determine the payout amount.
Be Honest and Accurate
When filing your fire insurance claim, it’s crucial to be honest and accurate about the damages. Lying or exaggerating the damages can lead to a denied claim or even legal trouble. Insurance companies have professionals who investigate claims and can detect any inconsistencies or dishonesty.
Keep Track of All Expenses
Keep track of all the expenses related to the fire damage, including temporary housing, food, and transportation. These expenses will be covered by your insurance policy. Keeping the track of them All Expenses
can help you to ensure that you receive the maximum payout.
Hire a Public Adjuster
A public adjuster is an independent professional who can help you navigate the insurance claims process. They can provide an expert assessment of the damages, negotiate with the insurance company on your behalf, and help you receive a fair settlement. While hiring a public adjuster can be costly, their expertise can help increase the success of your claim.
Does house insurance premium increase if a claim is denied?
Surely, your homeowner’s insurance premiums may rise. But, if you are the only one in your community to make claims, it will certainly raise a red flag for your insurance adjuster, and they may increase your premiums to reflect this.
But, if you were refused due to a natural calamity or something beyond your control, filing another claim later on should have no effect.
Reasons insurance companies deny fire claims | What Is covered by Fire Insurance?
Fires are one of Florida’s common causes of property damage. It accounts for more than $21 billion in property losses in the United States in 2020. Fire insurance compensates insureds for fire loss or damage so that they do not have to pay out of pocket. The type and extent of covered damages vary depending on the policy, but most standard insurance policies cover the following:
- The expense of restoring your home or business
- Cleaning up smoke and water damage
- Relocation costs while repairs are being made
- Personal and commercial property coverage
- Building contents Structural repairs
- Grounds and landscaping
- Structures found outside
What Causes Insurance Companies to Mishandle Fire Claims?
Florida insurance companies and their adjusters often mishandle fire damage claims. This can be due to insufficient training and oversight, a lack of experience, or purposeful actions used to decrease claim payments to insureds. The following are indications that your claim has been incorrectly altered or handled by the insurance company:
- The claim is being investigated slowly.
- Failure to respond to your calls
- Underestimating the cost of property damage
- Investigational delays
- Failure to explain clearly why a claim was denied
- Delays in making payments
- Refusal to investigate or review elements of the allegation
- Ignoring property damage evidence
- Falsifying or misrepresenting information about the claim or coverage
Reasons insurance companies deny fire claims & Complaint to state’s insurance commissioner.
If you still believe your loss should be covered and your insurance company continues to delay and deny your fire damage claim, you can submit a formal complaint with the insurance board in your state.
The insurance commissioner will consider each complaint on its own merits and the insurance company will be compelled to reply accordingly.
This step will start an automatic review of your denied claim, your efforts to reverse the decision, and your evidence and justification for requesting the reversal.
You must have to explore all available remedies to address your problem before filing a complaint. Your insurance policy will detail the actions that must be taken in order to file a claim.
How can you deal with an insurance adjuster after a house fire?
Keep the receipts Safe:
Keep receipts or use an electronic payment method to record all of your out-of-pocket expenses.
Hire Public Adjuster:
If you’re experiencing issues with your insurance adjuster, consider hiring a public adjuster. Public adjusters represent policyholders and can assist you in negotiating a fair settlement.
Hire contractor before Insurance adjuster Visit:
Hire a contractor before your insurance adjuster arrives. He will assist you in making a fair estimate of total loss and help you in convincing the insurance adjuster about the claim amount.
Describe him what took place:
Always make every effort to be present at home when the insurance adjuster arrives.
Be truthful but do not apologize for anything –
Walking through a fire-damaged house with an insurance adjuster can be an emotional experience for any homeowner. Suddenly, it’s easy to unfairly blame yourself for the damage. But don’t say anything to the insurance adjuster that could be misinterpreted.
Inform the insurance adjuster of your efforts at reducing the damage:
Explain to the insurance adjuster how you reduced and prevented additional damage by acting quickly and try to prove that you acted smartly in that event.
Point out hidden damages:
You remember how your house looked before the fire. If any damage remains visible after the fire, notify the insurance adjuster.
Request a Cash Advance
You have the option of requesting an advance on your insurance claim. This is usually paid against “Personal Property and Contents Coverage”. You were likely compelled to leave your home, and this advance will help you pay for basic necessities.
Do Not Agree on adjuster’s suggested Contractor:
A conflict of interest should always be avoid! Do not agree to use the repair or mitigation contractors recommended by your insurance company’s adjuster. You are not required by law to use them. Insurance companies-recommended those contractors who work in their best interests. To secure their future work, they will always protect their insurance company relationship.
Ask for the next steps
While you’re speaking with the insurance adjuster, inquire about the next steps in the claims process.
Get everything in Writing:
After the meeting, send the insurance adjuster an email to confirm everything you discussed, including the next steps. This will become evidence for you to challenge later if the claim gets denied.
Analyze the settlement offer
If you do not believe it is fair, ask the insurance adjuster to explain why. Also, explain why you are unable to agree.
Negotiate with insurance adjuster:
Do not feel obligated to accept the first settlement offer that comes your way. If you believe your insurance company is underpaying you, you can and should negotiate with the adjuster.
Reasons insurance companies deny fire claims | FAQs
Which Insurance company denies the most claims?
Here we have listed the insurance companies that usually denies the most insurance claim:
4. STATE FARM
7. FEDERAL EMPLOYEE BENEFITS
What is the best insurance company for claim settlement?
Max Life Insurance has the highest claim settlement ratio in terms of claim number, with 99.34% for the fiscal year 2021-22. Exide Life Insurance and Bharti Axa Life Insurance came in second with a 99.09 percent death settlement ratio.