How to Avoid a Disappointing Claims Experience

How to Avoid a Disappointing Claims Experience

It’s a truism; insurers are glad to receive your premium payment, but not happy to pay your claim!  The changes I have seen in my greater than 40 years of experience are not an illusion.  Decidedly, there has been a gradual shift towards more stringent control of claims’ costs and less personal contact between insurers and their customers who experience difficulties in claims.

Technology will not be, contrary to the expectations of many, the panacea.  It will not lead to greater contact between claimants and their insurers.  The opposite will occur as technology enables insurers to “adjust” claims remotely and reduce empathy with the plight of the claimant.  Today, use of drones, satellite and inspection services (even independent adjusters) all combine to ensure the control of claims and decisions on policy remain vested with a nameless in-house claims handler.  The person who attends the property to inspect following a catastrophe is not the person who adjusts the claim.

The consequence of this approach to claims handling is a loss of communication between the policyholder and their insurer.  When that happens, the claims experience can become both daunting and disappointing.  A letter communication from the insurer arrives confirming someone inspected the damage or has reviewed the claim and sets out the adjustment of the loss.  The inexperienced insured is left to decipher what damages are being covered, which are not, how much is offered and, what to do with personal or business property, additional living expenses or business income losses.  The assistance that most insureds presumed they would receive, does not materialize.

🤷‍♂️ 🤷‍♀️ An insured that throws up their hands because they do not know what to do when dealing with a claim will face disappointment.  The fact the insured may be disappointed or embittered by the experience may be as perplexing to the insurer as the insured.  The insurer’s process depends on rigor, measurement of performance, average loss amounts, cost containment and policy interpretations that dictate their claims handling.  Measuring the satisfaction of the claimant or ensuring the claimant fully understands the process is generally not a factor in the drive to control and close claims by the insurer.

Inevitably, some claimants will be satisfied, but increasingly, surveys find that insureds are disappointed following filing an insurance claim.  Here are some common reasons cited over-and-over when we speak to claimants:

  • It has been 3 months since someone came to see our property, but we have heard nothing;
  • We received a letter telling us our claim is below deductible, but our contractor says the damages are severe;
  • Our property continues to suffer more damage each day, but we are told we should not do any work until we agree on damages and costs;
  • We don’t have the money to do repairs, move our family, or pay our other bills. When will they pay anything;
  • Our agent has called the insurer but cannot get answers;
  • The person who inspected our property won’t answer calls or answer any communications, but what they told us is not what is shown on the insurance estimate;
  • We have sent everything they asked for several times, but they say it is not enough.


The comments above indicate frustrations that are commonplace.  Good faith in claims handling practices is assumed by policyholders from their insurers and such aggravations can be disappointing and costly.  Not everyone handles their own plumbing issues and there is no reason to assume everyone should be capable of handling their own insurance claim.  There is also no reason to assume that in a transaction that can be as costly as an insurance claim to an insurer, that the insurer’s goal is to ensure the claimant’s expectations are met.  Here are some things you might do to avoid a disappointing claims experience:

  • Be skeptical. That is not to say that you must be completely circumspect or anticipate the worst.  But if you are skeptical, you will be apt to be less disappointed when everything does not work out as you may have envisioned.
  • Ask questions. Most people are novices in insurance and claims.  It is neither offensive or bothersome to ask those employed by the insurer to assist you, to fully explain your policy and the claims process.  You are entitled to be informed as you paid premiums for that privilege.
  • Get things in writing. Don’t rely simply on verbal communications that can be misconstrued, misunderstood or denied.  Always ask for documents, policies and communications in writing in case you need the record.
  • Be prepared. Before you agree to an adjustment, even before an inspection, if possible, make your own list of the damages or engage a contractor to assist you.
  • Don’t abrogate responsibility. The damaged property is your investment so don’t allow others to dictate what happens or assume control.  There is less likelihood you will be disappointed if you remain in control.  The insurer does not own the claim, you do!
  • Engage experts. At the first sign of disagreement, do not get frustrated.  Instead, recognize that disagreements are not uncommon and it within your rights to engage a Public Adjuster or Attorney to assist you.  Hiring someone does not suggest failure; it does not suggest you are adversarial.  It is a perfectly reasonable thing to do when protecting your rights and ensuring you receive the benefits to which you are entitled.


At Global Claim Advisors and Case Strategies Group, we understand the frustrations and disappointments felt by insureds who encounter a poor claims experience.  Oftentimes, despite the best intentions of parties involved, lack of communication, failure to express or meet expectations and lack of understanding lead to intransigence and a complete breakdown of the process.  We strive to restore balance and achieve positive outcomes.


For further information go to www.hiregca.com or www.hirecsg.com

Replacement Cost Coverage – Part 2

Actual Cash Value

While you may have purchased replacement cost coverage, an insurer is not obligated to provide payment of an agreed replacement cost up front.  Settlement will first be paid as actual cash value (“ACV”) at time of loss.  ACV is usually defined as replacement cost less depreciation to equate to value at time of loss.  It may also be determined as market value for personal property, for instance.  However, when expecting the adjustment payment on damage to your property, don’t expect full replacement cost to be paid immediately.  The insurer will first pay only the ACV less any applicable deductible.


Time Limits for Replacement Cost

Most property insurance policies contain provisions that limit the time for you to exercise replacement.  Policies invariably provide that the insurer will first pay ACV and then, if replacement is completed within 180 days from date of loss (sometimes date of payment of ACV), you are entitled to make claim for the withheld depreciation amount.  Be careful to comply with time limits or ask for extensions that are usually granted.  And, make sure if costs are greater than the estimated RCV, you advise your insurer or they may resist payment to full replacement cost where it was greater than agreed.


Matching Issues

Great controversy exists where building materials are no longer available and replacement cost coverage is provided.  Insurers may take the position that the payment owed is only for areas that are directly damaged.  Consequently, you may find yourself with different colors of roofing materials on adjacent areas of the roof.  Or, you may find the insurer authorizing replacement of one area of siding and painting that area but not all sides to match.  You may suffer damages to flooring that is continuous throughout the home and have the insurer take the position that replacement cost does not include replacement of other adjacent areas simply to match finish.  Florida, and a number of other states, have dealt with such controversy by adopting legal precedent or changing laws to ensure that matching issues are resolved in favor of the insured.  Generally, circumstances where the property involved would suffer loss of value or appearance because of matching issues, insurers are forced to comply with reasonable matching requirements.  “Line-of-sight” adjustments are common compromises wherein flooring that is continuous and within line-of-sight will be replaced to match even if undamaged.


Repair vs. Replacement

Insurers are not liable under a policy to replace damaged property if repair will restore the property to pre-loss condition.  So, if you suffer damages to a roof but the damages are not enough to warrant total replacement, it may be permissible for the insurer to limit claim to the repair costs.  Loss to a kitchen cabinet, for example, may be adjusted on the basis of repair, even where the cost to repair or replace a damaged cabinet may be greater than comparable replacement of a single cabinet and thus avoid replacement of all cabinets.  Insurers have the option under the contract to repair or replace, but once they make that election, they become liable for the full costs.  Accordingly, where you may disagree with the insurer on this issue, require them to invoke their right to repair in writing and hold them to it.  Many policies are now sold with clauses to specifically allow insurers to exercise repair with their own approved contractor.  Ensure that these contractors are held to the same standards as you would require of any contractor under the insurance contract.  And, be aware of building codes that may prohibit repair where, for example, in a High Velocity Wind Zone, roof coverings must be replaced if damages exceed 25% of a section or roof area.



Most insureds do not have knowledge that allows them to assess the costs to rebuild their property.  Values of insurance are often derived based upon past amount or by formula that are average costs based upon area and finish.  Insurers require insureds to carry insurance to percents of replacement cost in order to recover replacement cost payment; usually to 80% or 90% of the estimated replacement cost.   If an insured fails to purchase adequate limits, they may find themselves underinsured and an unwitting co-insurer.  In effect, the insured will suffer a penalty at time of loss if they are underinsured; not to mention that if a total loss is suffered, the insured will end up paying additional amounts over the policy limits for the full replacement.  It is important for insureds to have knowledge of their property’s replacement value.  Beware, often agents will advise you are only required to purchase certain amounts of coverage.  They are aware that the premium will be less if less coverage is purchased but the insured will suffer the consequence if underinsured.

Replacement Cost Coverage

What is Replacement Cost Coverage?

If you have purchased a homeowners or commercial policy of insurance, you very likely have coverage for replacement cost.  Replacement cost insurance provides that if your property is damaged by an insured peril, you will receive a settlement based upon “like kind and quality” for the full replacement value of the lost property, up to policy limits.  So, if you lose your home or business in a covered hurricane event, for example, you are entitled to the replacement cost of the loss, not to exceed the policy value.


What is “Like Kind and Quality?

Simply, comparable replacement using available materials.  So, if your flooring is discontinued, adjustment is based upon materials that are equivalent in value and quality.  Flooring, siding, roofing and many components become discontinued; television and stereo models are evolving constantly.  Replacement cost simply means you may get an unexpected upgrade to your television, if damaged.  Insurers use the terms “like kind and quality” to limit the replacement to whatever is currently available and comparable.


What is the benefit of Replacement Cost?

The obvious benefit is that you get “new-for-old”.  If you lose your home in a hurricane, you get new flooring, not previously used; you get a new roof, even if your roof was 10 years old; you get new appliances.  There are caveats, of course.   If your appliances were obsolete and not working, you are not entitled to new appliances.  And, if you do not want to replace the property or items, you lose the benefit of replacement cost, but sometimes, it makes sense not to replace as well.  If you have items you no longer need, or too many, you can always elect just to receive the “value at time of loss” instead of replacement cost.  The choice is yours.


What do I need to look out for with Replacement Cost?

There are things to be aware of when your policy provides replacement cost coverage.  In our next series of blogs, we will discuss some of the more common things you need to be informed about:

  • Actual Cash Value versus Replacement Cost
  • Time Limits for Replacement
  • Matching Issues
  • Repair versus Replacement
  • Co-insurance