What To Do About An Underpaid Claim
Most underpayments are missing scope, not low prices. Here is the checklist we run on every estimate that comes through the door, in the order that finds the money fastest.
The check arrives and it is not enough. Before you argue about the number, work out why it is short - the answer is almost always structural, and it is almost always one of the items below.
Run this list against the estimate, in this order.
1. Is this the first check or the settlement?
On a replacement cost policy the first payment is the actual cash value - replacement cost, minus depreciation, minus deductible - with the recoverable depreciation held until the work is done and invoiced.
An enormous share of "underpaid" claims are not underpaid at all. They are correctly-structured first payments that nobody explained. Check the summary page for a depreciation line before you do anything else. The worked example.
2. Did anybody invoice for the depreciation?
If the work is done and you never sent a final invoice, the depreciation is sitting there unclaimed. Carriers do not chase you for it. This is the largest single category of money property owners leave behind and it is the easiest to recover.
3. Are whole trades missing?
Compare the estimate to your own photographs, area by area. Look specifically for:
- Gutters, downspouts, fascia, drip edge, flashing, roof vents, turbines
- Window screens, window wraps, garage doors
- Siding on the storm elevation
- The AC condenser and anything else mechanical on a roof
- Detached structures - shed, detached garage, fence, pergola
- Interior damage that followed
- Debris removal, and dumpster and permit costs
- Paint, drywall, insulation, electrical detach-and-reset
4. Code upgrades
Does the estimate carry a line for ice-and-water shield, drip edge, ventilation, upgraded fasteners or deck replacement where the local jurisdiction requires it? Does your declarations page show ordinance or law coverage? If the answer is yes and no respectively, that is a supplement with a code citation attached.
5. Overhead and profit
Where a job requires three or more trades and general contractor coordination - and a hail loss with roof, gutters, siding, paint and interior repair does - general contractor overhead and profit is a legitimate line item. It is commonly omitted on the first pass and it is a meaningful percentage of the job.
6. Matching
Partial roof, one elevation of new siding, a discontinued tile. The matching argument, and what evidence it needs.
7. The commercial coverages
On a commercial, multi-family, HOA, school or municipal building, also check for:
- Business income and extra expense - lost revenue and the cost of operating elsewhere
- Loss of rents
- Ordinance or law at its real limit, including undamaged-portion and increased-cost-of-construction components
- Blanket versus scheduled limits, and whether coinsurance has been applied correctly
- Tenant improvements and betterments
These are frequently absent entirely from a first estimate, and they are usually larger than the building repair argument.
8. Only now, the unit prices
If every category is present and you still think the number is low, then it is a pricing argument. The estimating database is a regional average and it lags actual local costs. Real bids from real local contractors are the evidence.
This is the weakest of the arguments and the one most people start with.
Then write it up
Everything above becomes a supplement: line items in the carrier's estimating format, each one with a photograph number, a code section or an invoice behind it, submitted in writing with a date you follow up on.
If coverage is agreed and the fight is purely about the amount, appraisal is in your policy and resolves it without a lawsuit.
Send us the estimate and your photographs. Running this list takes us about twenty minutes and it costs you nothing.
Keep reading
Denied And Underpaid Property Claims
What a denial letter is really telling you, why most underpayments are scope problems rather than price problems, and the four routes back - in the order worth trying them.
Denied And UnderpaidYour Hail Claim Was Denied - What Happens Next
A denial is a position, not a verdict. Most hail denials come down to three stated reasons, and each of the three is answered a specific way. Here is how to read the letter and what to send back.
Denied And UnderpaidUnreasonable Delay Or Denial Of Benefits In Colorado
C.R.S. 10-3-1115 and 10-3-1116 give a Colorado policyholder a remedy that most people have never heard of - two times the covered benefit plus attorney fees. Here is what it covers and what it does not.