How to Make An Insurance Claim Without Getting Hosed

I wish I had known how to make an insurance claim a few years back. In 2006 my toilet gave me a gift that kept on giving – and it wasn’t nice. Water flooded out of our commode into our living room and kitchen. This ruined our beautiful hard wood floors, leather furniture and newly painted walls. It also destroyed our kitchen cabinets. In short, it was like we experienced a nuclear explosion confined to the interior of our home.

To make matters worse, it took several months to get our insurance claim paid. And when the company did settle up we only received about $12,000. Keep in mind that we incurred more than $50,000 in expense. I could not even sue them in Small Claims court because I signed off on the agreement. “The Man” stuck it to us pretty good. Had this happened today, I would have taken a completely different approach. Here’s what I would have done differently to get a better, faster settlement that was fair:

1. I should have taken more time.

When you are living in a bio-hazard zone, you want to take care of it fast. That’s understandable but it’s also a mistake. By all means, get out of the house if it’s unlivable but don’t rush to settle with the company. You are going to be emotional during those times and the insurance company is going to try to capitalize on this by making you a low-ball offer. They know you are under duress and not thinking straight. Just slow down.

2. I would not have relied on my insurance agent.

You know that nice insurance agent who behaves as if he or she is your advocate? Take a look at their business card. You’ll notice that it doesn’t have your name on it. That’s because they aren’t working for you. It has the insurance company’s name on the business card because that’s who your insurance agent works for.

I’m sure he or she is honest, friendly and kind. But at the end of the day, he is an agent for the insurance company – not for you. Your agent is looking out for the company’s interest. Not yours. Keep that in mind at all times.

3. I would have documented before and after.

Even though you probably aren’t standing in the middle of flush flood like I was several years ago, that doesn’t mean you should be complacent. Take pictures and video your property now – before there is a problem. Take time to capture everything while it is in good working order. Inventory your property. Write down what you think it would cost to replace your property.

Then, if heaven forbid you become the victim of terrible circumstances, take another tour of your home and record the scene. Keep both pictorial versions of your property safe and sound and present them to your insurance company along with your inventory to prove your losses.

4. I would have been more strategic.

It’s important to get emergency repairs done if doing so will stop the problem from becoming worse and ruining more of your home. But try to do as little as possible until you come to (fair) terms with your insurance company Again, the insurance company will want to wrap things up quickly in order to get you to take their low-ball offer. Don’t fall for it like I did.

While we’re on the topic of your insurance company make sure you don’t blindly accept the contractors they suggest. Be smart about selecting your contractor and how you work with them. Get multiple estimates and check references. Your insurance company’s contractors work for your insurance company – not you.

As repairs and property replacements are made, keep your receipts and turn them over to the insurance company. They will need them and it will help you get your claim paid much faster.

5. I would have hired my own adjuster.

By far, the most important thing I’d do today that I did not do years ago (while swimming in my living room) would be to hire a private adjuster rather than accept the adjuster who worked for the insurance company. Private adjusters work for you. They go to bat “mano el mano” on your behalf against the insurance company. This keeps everyone honest – or at least as honest as possible. And since these people know the rules and the laws, your insurance company won’t be able to play games.

Only work with adjusters who are paid a percentage of the settlement. This gives them an incentive to work hard for you. As in hiring any professional, insist on getting references and checking them out before signing on the dotted line.

My best advice is to be prepared before lightning strikes. The most important two steps are to document the contents of your home and speak with a private adjuster. That way, if calamity visits you, you’ll be able to take charge and not become another insurance company victim.

Have you ever had to make an insurance claim under duress? What would you do differently?