Claim Insight: What if the carrier didn’t cover the full cost of repairs?

You’ve filed a claim, received a payout from your insurance carrier, and started the repair process, only to find out that the insurance money isn’t enough to cover all the necessary repairs. This can be a frustrating and stressful situation, but it’s not uncommon. If you find yourself in this predicament, don’t panic—there are steps you can take to address the shortfall and ensure your home is properly repaired. Here’s what you need to know and do if your insurance carrier didn’t cover the full cost of repairs.

Here’s what to do if you find yourself in this situation.

1. Understand Why the Full Costs Weren’t Covered

First, it’s important to understand why your insurance carrier didn’t cover the full cost of repairs; understanding the reason behind the gap in costs covered will help you decide your next steps. Common reasons include:

• Policy Limits: Your insurance policy has maximum limits on what it will pay out for certain types of damage. If the repair costs exceed these limits, you’re responsible for the difference.
• Deductibles: The deductible is the amount you agreed to pay out of pocket before insurance kicks in. This amount is subtracted from your claim payout.
• Exclusions: Some damages might not be covered under your policy, leaving you to foot the bill for those repairs.
• Actual Cash Value vs. Replacement Cost: If your policy pays out based on actual cash value (ACV) rather than replacement cost, depreciation is factored in, which can leave you with less money than needed for full repairs.

2. Review Your Policy, Claim, and Estimates 

Take a close look at your insurance policy and the details of your claim. Make sure the payout aligns with the terms of your coverage. Check for:

• Coverage Limits: Verify that the payout reflects the maximum allowable amounts for the types of damage covered.
• Errors in the Claim: Ensure there were no mistakes or missed details in the claim that could have affected the payout amount.

If you feel that the payout is insufficient, compare the insurance company’s estimate with those from contractors. It’s possible the insurer’s estimate was too low or didn’t account for all necessary repairs. If you notice discrepancies, gather documentation such as detailed contractor estimates, invoices, and photos of the damage to support your case.

If you find discrepancies or believe the payout doesn’t match your coverage, it’s time to take action.

3. Contact Your Insurance Adjuster

Reach out to your insurance adjuster to discuss the shortfall to calmly explain your concerns and ask for clarification on why the payout didn’t cover the full repair costs. If you believe there was an error or that additional damages were overlooked, provide evidence, such as contractor estimates, photos, and repair invoices.

Here’s what to discuss:

• Specific reasons for the shortfall: Ask why the payout was less than expected.
• Revised estimates: Present any new contractor estimates that show the true cost of repairs.
• Request a Reassessment: Ask if the adjuster can reassess the damage or if you can submit a supplemental claim for the additional costs.
• Clarify Coverage: Make sure you fully understand how your coverage applies to the repairs and whether there are any additional benefits or endorsements that could help.
  
  

4. Consider Filing a Supplemental Claim

If you discover more damage after repairs have begun or if certain costs weren’t initially accounted for, you can file a supplemental claim. This is an additional request to your insurance company for more funds to cover the unexpected costs and is explained more in another blog post.

To file a supplemental claim:

• Gather Documentation: Collect all necessary documents, including updated repair estimates, photos, and any other evidence of additional damage.
• Submit Promptly: Contact your insurer as soon as possible to report the additional damage and request a supplemental claim. Some policies have time limits for filing additional claims.

5. Explore Financial Assistance Options

If you’re still facing a shortfall after negotiating with your insurer and contractor, you may need to explore other financial options. These could include:

• Negotiate with Your Contractor: Some contractors are willing to offer payment plans to help cover the difference or they may be able to suggest alternative materials or methods to reduce costs without sacrificing quality.
• Home Equity Loan or Line of Credit: Borrowing against your home’s equity can provide the funds needed to cover the repair costs.
• Personal Loan: A personal loan can offer a quick way to access additional funds, though it may come with higher interest rates.
• Government Assistance: In some cases, government programs or local charities may offer financial assistance for home repairs, especially after natural disasters.

6. Consult a Public Adjuster or Attorney

If you believe your insurance company is not handling your claim fairly or if they refuse to cover additional costs, consider hiring a public adjuster or an attorney specializing in insurance claims. A public adjuster can provide an independent assessment of the damage and negotiate with the insurance company on your behalf, potentially securing a higher payout.

Tugboat can continue to help you advocate for yourself, including personalized claim support, or recommendations to different firms that may be best suited for your claim.

7. Plan for Future Coverage

Once you’ve resolved your current repair issues, it’s important to review your insurance coverage to prevent similar shortfalls in the future. Consider:

• Increasing Coverage Limits: If your current policy limits were too low, consider increasing them to ensure you’re adequately covered.
• Adding Endorsements: Look into additional coverage options, such as replacement cost coverage, inflation protection, or specific endorsements for risks like flooding or earthquakes.
• Reviewing Deductibles: Assess whether your deductible is set at a level that you can comfortably afford in case of a claim.

Conclusion: Take Action and Stay Proactive

If your insurance carrier didn’t cover the full cost of repairs, don’t just accept the shortfall. By understanding your policy, communicating with your adjuster, and exploring all your options, you can ensure your home gets the repairs it needs without breaking the bank. 

Taking proactive steps now can also help you avoid similar issues in the future, giving you greater peace of mind and financial security. This includes signing up for Tugboat’s membership for on-demand assistance for your home insurance, with proactive tools, like home inventory and policy review.