Top 14 Homeowners Insurance Myths

By William S. Coffman, Jr., WHN’s Guest Columnist, public adjuster and the president of Strategic Adjustment Services, Inc., based in Miami Beach, Florida.

Homeowner’s insurance can be a bit complicated. Here are some common myths about insurance and insights into the realities of insurance and the claims process:

1. My insurance company insures my home.
   • Reality: Your homeowner’s insurance company insures you against the risk of financial loss arising from the ownership of your home. In this way the insurance company can determine the financial loss it wishes to pay you for. To the extent you can prove your financial loss, all other things considered, you can collect.
2. My insurance company’s “adjuster” represents my best interests.
   • Reality: The adjuster hired by the insurance company will determine the minimum amount of money the insurance company is contractually obligated to pay. In this regard, the adjuster represents the insurance company’s interests and not yours. To the degree those interests align, you benefit. To the degree they do not, you are left to your own devices.
3. My insurance company has a duty to put my interests first.
   • Reality: You have a contract with your insurance company. Your insurance company only has to fulfill its contractual obligations and does NOT have to put your interests first.
4. My insurance company will determine the value of my loss.
   • Reality: Your insurance company will try to determine the value of your loss if you let it. The LOWEST value.
5. The insurance company’s word is final.
   • Reality: The provisions of the policy provide cost-effective ways to assure the insurance company will pay the true value of your claim. You also have the right to hire a public insurance adjuster or an attorney to assist you in obtaining the true value of your claim.
6. The insurance company will subtract a deductible from my settlement.
   • Reality: There are some circumstances which the insurance company should not subtract a deductible.
7. If I have a covered loss, my insurance company will pay my claim in full. 
   • Reality: Insurance policies contain many exclusions, conditions and/or limitations that they use to limit the amount of the claim otherwise due to their policyholder.
8. My insurance company will pay for my additional living expenses if my home is damaged.
   • Reality: There are conditions that must be present before an insurance company considers your loss-of-use claim. Even if these conditions are present, your insurance company only owes your additional living expenses and not your out-of-pocket expenses.
9. My insurance company must determine the value of my claim.
   • Reality: The burden of proving the value of your claim is your responsibility. To the extent you can demonstrate to the company your claim’s worth, you can collect. Deductibles, special limitations and exclusions also affect how much the insurance company will pay.
10. My insurance company’s adjuster will advise me of my rights under the policy.
    • Reality: They should, but they don’t always.
11. I’ve paid my premiums. I have a loss. My insurance company will take care of me.
    • Reality: It doesn’t matter that you’ve paid your premiums for years and years. The insurance company’s obligations are only those contained in the contract.
12. Experts hired by my insurance company will determine what is damaged.
    • Reality: Experts are hired by the insurance company to assist the company in determining whether or not to cover the loss. If the insurance company hires an expert whose findings result in a no-coverage position asserted by the insurance company, you may want to hire your own expert to obtain an independent opinion. Remember, experts working for insurance companies represent the insurance company’s interests, not yours.
13. My insurance company will give me copies of the notes, test results, pictures and reports regarding my home.
    • Reality: Not necessarily. Insurance companies may be acting “in anticipation of litigation.” In other words, it may not have to provide any part of its investigation to you.
14. If my home is damaged and my insurance company pays me, I will be able to immediately begin to repair my house.
    • Reality: Not necessarily. If your home is mortgaged, the insurance company will include the name of your mortgage company on the check. The mortgage company may then insist upon placing the insurance proceeds into escrow and have you petition them to release the money. If you are behind on your mortgage, the mortgage company may refuse to release any money until the mortgage is brought current.

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