Is Your Insurance Claim Underpaid? Here’s What You Can Do

February 26, 2025 9:34 am Published by In the event of disaster, be it damage to your property, a car crash, or a medical emergency, you rely on your insurance to deliver the coverage you’ve been footing the bills for. But what if your claim is not just underpaid but even denied? You might be frustrated, helpless, and in doubt about your next move. If you feel that your insurance company has shortchanged you, don’t fret—you have alternatives. In this article, we will discuss the reasons why insurance companies underpay claims, how to recognize an underpaid claim, and how you can get a justifiable settlement.

Why Do Insurance Companies Underpay Claims?

Insurance providers are businesses, and like all businesses, they aim to maximize profits. Unfortunately, this often means that they may try to pay out less than the full value of a claim. Here are some common reasons why claims are underpaid:
  • Low Initial Offers – Insurers may offer a quick, lowball settlement, hoping you’ll accept it without questioning.
  • Misunderstanding of Policy Terms – Insurers might interpret policy terms in a manner that reduces their payment.
  • Assessment Mistakes – An adjuster’s assessment may not cover the complete value of your losses.
  • Depreciation Computations – Insurers withhold excessive depreciation from claims, especially for residential and property loss.
  • Exclusions and Loopholes – Certain policies contain exclusions that insurers exploit to deny partial or complete claims.
  • Delays and Bureaucracy – Some insurers delay the claims process to try to intimidate you into taking a lower offer.

How to Identify an Underpaid Claim

If you’re wondering if your claim has been underpaid, watch out for these red flags:
  • The settlement amount is much lower than your estimated damages.
  • The insurance company hasn’t clearly explained their calculations.
  • Your claim was partially denied on the basis of ambiguous or unclear policy language.
  • The adjuster’s evaluation seems incomplete or inaccurate.
  • You’ve been rushed into accepting an offer.
If any of these ring a bell, you need to take immediate action to dispute the settlement.

Steps to Take If Your Claim Is Underpaid

1. Read Your Policy

Begin by reading your insurance policy carefully to know your coverage. Read it carefully, paying special attention to exclusions, deductibles, and limits that may impact your claim.

2. Document Evidence

Get as much documentation as you can, including:
  • Photos and videos of the damage
  • Repair estimates by independent professionals
  • Medical records (if it’s a health or accident claim)
  • Correspondence with your insurer
  • A clear list of destroyed or lost property

3. Get a Second Opinion

In case you are not satisfied with your insurer’s valuation, then you can look for an independent estimate or appraisal from a professional. There are many public adjusters and contractors who specialize in assessing insurance claims.

4. Negotiate with Your Insurer

You don’t have to take the first offer. Write a formal letter protesting the underpayment and present evidence for your cause. Be persistent and keep records of correspondence.

5. Get a Public Adjuster

A public adjuster negotiates on your behalf (not the insurance company’s) to evaluate damage and arrive at a fair settlement. They charge usually as a percentage of the amount recovered but can make a huge difference to your payment.

6. Complain

If negotiations don’t work, you can complain to your state’s Department of Insurance. Regulators look into unfair insurance practices and can coerce insurers to pay reasonably.

7. Pursue Legal Action

As a last resort, speak with an attorney who handles insurance claims. Many attorneys provide free consultations and operate on a contingency fee basis, which means they only receive payment if you prevail in your case.

How to Avoid Future Underpaid Claims

Although you can’t always anticipate the actions of an insurer toward your claim, you can prepare by taking the following steps:
  • Maintain detailed records of your insurance policy information and assets.
  • Document valuable items and properties with photos prior to damage being caused.
  • Read your policy’s terms thoroughly and request explanations beforehand in anticipation of having to make a claim.
  • Utilize reputable contractors and independent adjusters for assessment.
Handling an underpaid claim can be stressful, but you don’t have to settle for less than you deserve. By knowing your rights, having solid evidence, and getting professional assistance when necessary, you can enhance your chances of receiving a fair settlement. If you believe your claim is being dealt with unjustly, don’t be afraid to stand your ground—your financial future is at stake. Keep in mind, insurance is designed to cover you, and it’s your right to hold your insurer responsible.

CONTACT MIKE ACERRA

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This post was written by Trishala Tiwari

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