How to get the most from your insurance claim

A tree leans against a house Tuesday, Oct. 30, 2012, in the Bay Ridge neighborhood in the Brooklyn borough of New York, while another tree lies on a taxi with a shattered rear window in the aftermath of superstorm Sandy. New York City awakened Tuesday to a flooded subway system, shuttered financial markets and hundreds of thousands of people without power a day after a wall of seawater and high winds slammed into the city, destroying buildings and flooding tunnels. (AP Photo/David Boe) David Boe

(MoneyWatch) A few days ago I wrote about what to do before you file an insurance claim. Being well informed and prepared can improve your chances of receiving a fair insurance claim settlement.

Once your property loss is assessed and your claim is approved, it's not uncommon to find yourself in a disagreement with the insurance company over their first settlement offer.

Review the adjuster's report carefully
After an adjuster inspects your loss, they'll prepare a written assessment of the damage that needs to be repaired, items to be replaced and their estimate of the costs for each. It's important to know that adjusters typically use a replacement cost computer program to prepare their reports and the costs for materials and contractors will be based on regional or national averages. The adjuster will provide their report to the claims supervisor, who will then issue you a check based on the coverage in your policy and the adjuster's report.

If you have a mortgage secured by the damaged property, the mortgage company or bank will also be named on the insurance settlement check. Because of this, you'll have to endorse the check and send it to the mortgage company. The mortgage company will hold the funds in a loss draft account, and then disburse the funds to you in installments to pay your contractors/builders.

The offer
When you receive the first check from the insurance company, do not deposit it or send it to your mortgage company until you have carefully reviewed the adjuster's report and agree with all items and costs. Look for things such as missing items, partial or incomplete measurements and low-balled contractors costs.

In local markets where builders and skilled labor are in short supply, the regional costs used in the adjuster's report may be significantly less than what it will actually cost to replace what you had before the loss. If this is the case, do not agree to accept the first offer from the insurance company. The insurance company will recommend that you do and that you can later bring additional items to their attention and they would make supplemental claims later. Instead, return the first check and request that the adjuster revise the report and request a check from the insurance company for the correct cost of the damage.

How to complain effectively
At times, you may feel that your requests for covered losses are not being responded to fairly, or at all. It is in these times that your written documentation will pay off.

Make all complaints in writing: Be complete but concise, be professional and polite. Be specific in your written complaint and include:

-- The specific issue or problem

-- A specific request for resolution

-- A response time frame

Also, it's a good idea to copy the complaint to a supervisor or manager one level up. Make sure to ask the insurer if they require any additional information from you and when they need it. Finally, include in your complaint that if a reasonable resolution cannot be offered you are prepared to file your complaint with your state insurance regulatory agency. To find your state insurance regulator, visit the web site for the National Association of Insurance Commissioners.

Check back in a few days when I'll write about what to do if there is a large difference between what the adjuster says the insurance company will pay and what you believe should be paid under your policy.

  • Ray Martin

    View all articles by Ray Martin on CBS MoneyWatch»
    Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS Moneywatch.com and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.

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