Why will homeowners’ insurance not cover the damage to my house?

| Sep 21, 2020 | Homeowner Claims

After a natural disaster, accident or construction failure in Florida, your insurance company may refuse to cover the damage. You may be able to dispute the decision and get the compensation you need. Indeed, in some cases, you may not be able to recover if you did not properly evaluate your coverage, but often companies deny claims that policies should cover.

Understanding some common insurance disputes for homeowners will help you plan effectively and respond if they happen to you.

Actual cash value and replacement cost

Florida’s Division of Consumer Services reports that a common misunderstanding of homeowners is between actual cash value and replacement cost policies. The difference is vast. Actual cash value promises to reimburse you for the value of lost property accounting for its depreciation while replacement cost policies promise to pay the cost of a new item to replace the old. For example, if you buy a laptop for $1,000 and then lose it in a house fire three years later, ACV policies will pay out what they consider the item to be worth at the time of the fire, perhaps $250. Likewise, replacement cost policies will pay you the current market value for the same laptop, new.

If your policy is a replacement cost policy, your provider may require you to maintain a certain value percentage, 70% of the replacement value, for instance. They could penalize you or deny your claim if you do not carry enough at the time you file, so check regularly to make sure you are complying with requirements.

Responsibilities of homeowners

Many companies deny claims on the grounds that homeowners did not take sufficient care of the property and contributed to the damage. For example, if a hurricane strikes and damages your house, you are responsible to take reasonable measures to protect your property, such as by boarding up the windows or repairing vulnerabilities. These expectations are subjective and may be vulnerable in court.

Know what you have in your home, and have a record of the purchases. Keep an inventory with evidence of the things you own. Having this record can make all the difference between a company denying or paying out your claim.

It is no surprise that smart homeowners evaluate their contracts carefully when purchasing an insurance policy. There are various types of homeowners’ insurance policies and insurance providers, and each is different. Ensure that your claim covers what you need. Homeowners’ insurance in Florida does not cover flooding, for example, so you will need to carry separate flood insurance if you expect that protection.