Property and casualty insurance companies process millions of claims annually, according to the Insurance Information Institute. This includes those related to contractor and construction damage.
There are several disputes regarding contractors’ insurance claims in the US involving challenging the findings, payout amount, or denial decision made by an insurance company after property damage or construction-related loss.
In such cases, it’s important to understand how to dispute a claim properly to ensure fair compensation for covered losses.
Understanding the Two Scenarios
There are cases when a contractor damages a property during a construction project. When this happens, the contractor’s liability insurance becomes the initial resource used to cover third-party property damage claims that occur during the project. The only exception is for cases when the policy terms specifically define them as non-covered.
The liability carrier of the contractor defends its obligation to compensate the contractor for all damages and claims that its policies protect. But there are limitations to this, as their responsibility reaches only to the contractor and not to the property’s owner. The property owner is a claimant under the policy of the contractor’s insurance, not a named insured.
The difference impacts the process of dispute because the property owner cannot directly contact the insurer of the contractor to claim the policy; they can press the issue only against their contractual party.
The homeowner could have filed a claim on his or her homeowner’s insurance for damages suffered from a contractor’s job.
Miami contractor insurance is relevant in this process. Contractors in Miami often rely on specialized liability and workers’ compensation coverage due to the region’s high construction activity and strict regulatory requirements.
Reviewing the Policy and the Contractor’s Coverage
A property owner must first understand their insurance document before going legal. The certificate basically states the insurance company, its policy number, coverage limits, and the time of the coverage. It is not the same as the policy described itself.
The policy document defines both covered and uncovered items. Common exclusions from contractor general liability policies are damage to the contractor’s work, the contractor’s own defective work, or any damage that is expected or intended and non-accidental.
The homeowners’ or commercial property policy becomes the important document when a property owner deals with a claim against their policy. Most policies provide protection against loss or damage that occurs due to sudden and accidental events. Many insurance claims filed on behalf of a business can benefit from an experienced attorney’s assistance, says insurance claims attorney Joseph M. W. Burke.
Insurance policies typically do not cover damage caused by substandard work, normal operation of equipment, or ongoing system deterioration. Understanding which elements of an insurance denial should be excluded helps a non-expert to provide better answers.
Building a Documented Record
Construction of a reliable documentation base. A property owner wishing to dispute a claim should assemble the original guarantee and work agreement, along with any additional changes that establish the scope of work.
Among the things to be attached to the claim will be original photographs of the damage taken explicitly when the damage was first discovered; written communications in the form of the agreement, emails, text messages, etc. between the property owner and such written estimates or cited reports from other professionals detailing the nature and cause of the damage; and any further expenses charged by other nearby contractors on the repairs done to prevent any further loss.
In cases of a significant loss or when there is disagreement over the cause, retaining an independent public adjuster or a licensed engineer to prepare a report stating causation will greatly strengthen the dispute.
Public adjusters are professionals who obtain licenses to help policyholders with their insurance claims and their work is overseen by state insurance departments. The services of the company become essential when policyholders need to dispute claims made by their insurance providers but not for third-party claims, which fall under a contractor’s policy.
Filing a Formal Claim and Responding to a Denial
Homeowners, property owners, or contractors may dispute a claim if they believe the insurer undervalued the damage, incorrectly assigned fault, or failed to cover repairs outlined in the policy.
In case a claim is denied or the insured has agreed to a lower amount than the actual loss, the property owner must request a written denial with a citation to the line or sections of the insurance policy upon which the insurer relies for such denial.
The insurer is required to give written reasons for a denial under the prompt payment and claims handling regulations of the states. While the handling of claims is generally regulated by the statutes of many states modeled after the NAIC unfair-claims standards, these standards stipulate in essence the minimum obligations of acknowledgment, investigation, and settlement of claims in a timely manner.
The insured should discuss the denial’s specific exclusion and how it differs from the claim’s coverage. All correspondence to the insurer that places on record the policy wording, validates the findings for the suit, and includes counterclaims will provide evidence of a passionate argument against the adjuster’s position.
Appraisal and Alternative Dispute Resolution
Many property insurance policies include appraisal clauses that allow the insured or the insurer to demand an appraisal when there is a dispute regarding the amount of loss, even when the coverage is not in dispute.
Appraisal requires that each party selects their appraiser and the two appraisers appoint an umpire. The appraisers will record their judgments, and the award is binding if two of the three agree. Appraisal provides a much quicker and cost-effective alternative when involved in loss evaluation disputes.
Many states offer mediation and arbitration, either by the state insurance department or through contractual clauses in the policy or construction contract. Some states require insurance companies to offer mediation before moving into litigation.
The construction contract itself could include a mandatory arbitration clause that would govern disputes between owner and contractor, which is separate from any dispute with the insurer.
Filing a Complaint with the State Insurance Department
Every state has a department of insurance or similar body that receives complaints from policyholders about insurance carriers. Once filed, complaints will result in some form of administrative review of the insurance carrier’s handling of the claim.
While insurance departments are not courts and can’t decide who owes money in a disagreement over benefits, they can take action if they see repeated bad practices in how claims are settled, focus on how companies behave in the market, and sometimes encourage settlements informally. Threatening a regulatory claim often accelerates the insurer’s resolution process.
Online complaint portals for state insurance departments are mostly accessible, and most departments will accept complaints regarding delays, underpayments, denial without reasonable explanation, or not performing any reasonable investigation of the claims.
Bad Faith Claims
If the homeowner is also the policyholder and their premises have been persistently or grossly mishandled by the insurance company, they may have grounds for a breach of contract claim based on bad faith.
Bad faith in insurance means that the company acted on, refused, or negligently undervalued the claim without any justification. Several states take recourse to statutory breach of faith causes, common law tort claims, or both. The statutory penalties for bad faith include attorney fees, punitive damages, and delay penalties.
The insurance standards, available relief options, and applicable laws to the insurance industry show substantial differences between different legal jurisdictions. The situation requires a skilled attorney who understands the insurance regulations of each individual state.
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