Disaster Insurance Claims

Your home (or condominium or commercial building) is often your most valuable asset, and it is vitally important to preserve its value. When you make an insurance claim for fire, water, theft, vandalism, or other damage to part or all of your structure and contents, you probably assume — because of insurance company advertising — that the insurance company owes you a duty of loyalty to act in your economic interest. That assumption is wrong. Most policies attempt to limit coverage for various types of damage, and insurance companies often deny damage claims. If the insurance company agrees to pay the claim, then you enter a negotiation similar to an arm’s length sale of real estate: your adversary, the insurance company, wants to “buy” (i.e., repair) your structure for the least amount of money possible; you, the insured, want to be able to “sell” at full value (when you choose) and desire to spend as much as it takes to restore your structure to its condition before the damage.

The insured’s successful conduct of this arm’s length negotiation with a billionaire adversary requires a wide range of skills and tools, including: independent experts (i.e., not beholden to the insurance company) in engineering, contracting, construction, contents cleaning, and real estate; in-depth knowledge of insurance contracts (policies) and their interpretation over dozens of years by the courts; and skilled legal counsel whose fees may ultimately be borne by the insurance company.

Your adversary, the insurance company, will immediately seek to gain the upper hand in the negotiation, usually through intimidation. The insurance company may ask you to sign a “non-waiver” agreement, which asserts that the insurance company is not waiving its rights to deny coverage just because it is conducting an investigation. You should not sign. The insurance company may send you a letter asking you to supply personal documents and information, including tax returns. You should view such invasive requests with distrust. The insurance company may ask you to submit to an examination under oath. You should refuse to do so without the presence of your own lawyer.