​Things to know before filing a home-insurance claim

Recently I wrote about the large number of homes damaged by the flooding in Texas and the importance of having this special insurance.

After a storm damages your home, it's time to pull out your insurance policy and file a claim. But for most people, filing an insurance claim and getting through the insurance settlement process is something they've never dealt with. It can be confusing and intimidating. Before you begin, it's important to know how to go about it.

Most people filing insurance claims aren't sure what exactly is covered under their insurance policy. Folks are also concerned about trusting their insurance company. While you both want a quick claims payment, the insurance company wants to pay the least amount and you want to be fully paid for your costs in connection with your loss.

The first thing to do is to get your hands on a full copy of your insurance policy and read it. Your policy will include the coverage amounts for your dwelling, personal property and other structures. It will also spell out how you're covered for loss of use and other items.

When you report a loss to the claims department of your insurance company, they'll create a claim number for your case and assign the case to an adjuster. Before you go any further, I strongly suggest documenting all contact with your insurance company and their representatives. Write down the time and date of every call, what was said, by whom and what are the next steps. Your insurance company may want to handle your claim with little or no documentation, but while it may be time consuming, you should document everything by writing it down and/or sending emails. This will be helpful later if there is a problem and you need to explain it.

After the adjuster inspects your loss, they'll prepare a written assessment, or adjusters report. This is a report of the scope of the repairs, materials and costs needed to replace your loss. The adjuster will provide their report to the claims supervisor, who will then issue you a check based on the amounts in this report.

One of the most important things to do is to review the adjusters report to make sure it includes all costs to fully repair and replace your loss. Look for missing items, partial or incomplete measurements and low-balled contractors labor costs. In local markets where builders and skilled labor are in short supply, the labor costs used in the adjustors report may be significantly less than the rate your pay in your local market.

If you have a large insurance claim or there is a significant difference between what the adjuster says the insurance company will pay and what you believe should be paid under your policy, you may want to consider hiring a professional to help.

Consider hiring a Public Adjuster, or PA, who is licensed to represent you, the insured, and help to get you a full and timely settlement of your claim.

If your insurance company is digging in its heels and you are getting nowhere, you may have to resort to hiring an attorney. Don't seek the counsel of a family lawyer, but instead seek an attorney who specializes in the practice of "Plaintiffs Insurance Coverage" or "Bad Faith Litigation."

If you go this route, know that you'll pay additional costs. PAs and Plaintiffs Insurance Attorneys typically charge either a fee as a percentage of your settlement proceeds (10 to 33 percent) or hourly rates that can range from $100 to $400 per hour.

  • 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.