When will a home insurance company deny a claim for damage?

You purchased a home insurance policy and spent hundreds of dollars on premiums because you want peace of mind in case something bad happens.

Imagine how you would feel if your insurance company denies your claim after your home is damaged or ruined? Can that really happen?

Unfortunately, insurers deny many homeowners insurance claims for various reasons. To avoid this from happening to you, understand more about home insurance and how to file a claim successfully.

Know what your home insurance covers

Many consumers buy home insurance without really giving it a lot of thought. In most cases, they look at the price, choose a policy type, and then forget about it until they need to make a claim.

Actually, this is the worst thing that any homeowner can do. You bought home insurance to protect you from risks with your most expensive investment – your home.  You need to know what your home insurance actually covers.

Protection from Named Perils

In insurance, peril is a term used to define or name risks that are included in a policy.  Home insurance policies are exact in inclusions and exclusions.  Your policy would specify the perils you are covered for and also exclusions to your coverage.

If you don’t know exactly what your coverage is, take out your home insurance policy now and check the fine print.  A home insurance policy has the following important parts:

1. Coverage for your Dwelling
   This part defines what perils are included in your policy that could cause damage or destruction of your house.
2. Damage to Attached Structures
   This part defines coverage for damage to other structures of your property such as a patio, garage, shed, etc.
3. Damage or Loss of Personal Property
   This defines your coverage for the loss or damage of your personal property at home or anywhere in the world, including theft.
4. Living Costs Due to Loss of Use
   This part explains cover for additional living expenses such as temporary housing you incur if your house becomes unlivable.  Other expenses that may be reimbursed by the insurer due to loss of use includes cost of moving property, storage facility, groceries and dining expenses, gasoline, clothing, and cooking supplies.
5. Personal Liability Coverage
   This part explains cover for injury to others or damage to the property of others.  This includes instances when someone gets hurt while on your property or you spill red wine on someone else’s carpet.
6. Medical Payments
   This part is about medical payments for guests who get hurt while on your property, regardless of whose fault it is.

As you can see, a home insurance policy provides cover for a number of things.  Each category would have a limit.  You need to pay special attention to the Cover for Dwelling and Cover for Contents.

Review the Declaration Page of your Policy

Your policy should have a Declaration Page which provides all pertinent information including your policy number, period of coverage, coverage type and limits of cover, and your deductible amount.

Read the declaration page carefully and check for any riders you may have on your policy.  Riders are additional coverage purchased to expand cover.

Common Reasons Insurers Deny a Home Insurance Claim

Your home insurance policy is a contract between you and your insurance company.  For most people, they think that their only obligation to fulfill this contract is to pay the premiums.  Unfortunately, there’s more to it than just your payments.

There are other stipulations in the contract that a homeowner must fulfill.  Failure to comply with these stipulations could result in a denial of a claim.

Below are some of the most common reasons why a home insurance claim is denied.

● Material misrepresentation

Failure to provide the current address can result in denial. Whenever you move, you need to inform your insurance company.

● Claim not covered by policy

Many people do not really understand their home insurance policy fully.  It is important to know what your coverage includes and for how much.  On many occasions, homeowners think they are covered for a specific situation only to find out that they are not (ex: damage during a move, water damage, etc).

● Fraudulent claims

Most people file insurance claims to recover their losses covered by their policy. However, some file claims using fraudulent information to make a profit. Claims are duly investigated by insurance companies. Fraudulent claims are not only denied; they can also cause legal issues.

● Negligence

If the insurer investigates your claim and determines that the problem was caused by your negligence, your claim can be denied.  For example, claiming cost for a damaged roof can be denied if it is determined that it was caused by a pre-existing problem which you failed to correct early.

● In excess of cover

Your policy details the limits of liability on all items related to your home insurance.  These items (jewelry, art, rare coins, etc.) have specific limits.  If you make a claim for a higher amount allowed by your insurance, your claim can be denied entirely.

Steps to Take if a Home Insurance Claim is Denied

If you file a home insurance claim and it is denied, you would naturally feel upset.  Your home insurance is useless after all and you just wasted your money on something that doesn’t do you any good.

It is understandable that you would feel that way. But please remember that without home insurance, you would be in a much worse situation if something really bad happens, like your home is destroyed by fire, or a burglar carts away all your possessions.

Further, remember that the insurance company is a business and they make a habit of denying claims to avoid footing the bill.  If you feel you were treated unfairly by your insurer, take stock of the situation and take the following steps.  You may still be able to get a positive outcome.

1. Ask the Insurer to Explain Why your Claim was Denied
   You must review your claim and find out why it was denied.  Are you really covered for the damage you claimed? If not, throw out your claim and review your coverage to upgrade your level of protection.  Some exclusions not listed in your policy can be added by taking out a rider.If you don’t understand why the claim was denied, call your insurer and ask for a detailed explanation.  They are legally required to inform you the basis of their denial.
2. Understand your policy.
   Wording of your home insurance policy is specific but may be full of technical jargon.  Understand policy limits to check if you mistakenly claimed for an amount exceeding your limit.  If you did, they could deny it altogether.
3. Make an appeal.
   If you think you’ve caught the insurer on a mistake and your claim is valid, you can make an appeal.  Gather evidence using photos of damages. It is possible that the insurer would say that the damage is due to your negligence.  If you can prove that there was no negligence on your part, you may win your appeal.
4. Escalate your claim if you are unsatisfied with your insurer.
   If an appeal to your insurer still fails, you still have an option to ask for dispute resolution.  In Quebec, complaints about an insurer can be filed with the Autorite de Marches Financiers (AMF).  Provide your insurer with this AMF Form so they will be legally required to transfer the file.

Ensure you Have the Right Home Insurance Coverage

You don’t have to be stuck with a home insurance that is not adequate to your risks. Don’t renew home insurance without reviewing your coverage or renegotiating your rate with your insurer.

It is advisable to educate yourself about home insurance to get affordable but adequate coverage.  Below are ways you can simplify the process.

1. Obtain a free home insurance quote from one of our partner insurers and review policies carefully. Don’t shop based on lowest price as you will get coverage based on what you pay for.
2. Understand coverage levels because they are key to your home insurance. There is nothing worse than paying for substantial damage to your home out of pocket because it isn’t covered by your home insurance.
3. Consider getting add-ons to your policy. There are multiple riders you can obtain for an extra price that may be worth the cost.  For example, limits to jewelry and other collectibles are usually low. If you have valuable items, you may want to purchase higher limits to special items for your contents insurance.
4. Carry at least a $1,000 deductible. This will help to lower the cost of your premiums.
5. Avoid filing small claims.
6. Be honest with the insurance company, even about small things like your dog’s breed. Keep in mind that failure to disclose material information can lead to a denial of a claim or cancellation of your policy.

Shop Around for Better Coverage and Rates – Get A Free Home Insurance Quote

Insurance rates vary significantly from one insurance company to another.  You can get your quote free of charge by taking 2 minutes to fill-out our quick online form.

Insurance companies offer different types of policies; they are not all the same.  Make sure to compare apples to apples and always review coverage levels and deductibles.

Insurance agents and brokers (our partners) will be very happy to help with your home insurance needs.  They are connected with over 20 insurance companies and can offer you insurance products to suit your needs.

Request for your free home insurance quote to get protection from risks to your home.