It’s the common thing that people to buy home insurance policies to protect their houses from fire and several other catastrophes. Because a sudden fire caused huge destruction to the house. Moreover, an unforeseen house fire caused a sentimental shock to the family members and unexpected financial damage to reconstructing the house. The policyholder of home insurance considers that their insurance company will provide a claim to cover the loss. But Unluckily most insurance companies will refuse to pay off claims. In this article, we will explain some of the reasons insurance companies deny fire claims. Read this post to know about all the reasons why insurance companies deny fire claims.
In the united states, almost each insurance company refuses from paying out fire claims to thousands of their customers per day. The insurance companies do so by blaming policyholders, their neighbors, and their friends. Insurance companies more often deny fire damage insurance claims by blaming arson. So, an insurance company has a lot of reasons to deny fire insurance claims.
what Is Fire Insurance?
Simply fire insurance is an agreement between an insurance company and a policy buyer to cover the loss and damage of an unexpected fire and other disasters following a fire policy.
Typically fire insurance is a kind of property insurance. If the property is damaged due to fire, some insurance companies will cover the loss but most of the time the policy buyers of home insurance need to buy extra coverage for the covering of property damage.
A fire insurance policy with extra coverage offers additional coverage for property loss and helps in rebuilding the house. But the insurance policy typically denies the claim if the fire was caused by the negligence of the homeowner, wars, wildfires, and certain other dangers.
There are many types of fire insurance policies such as Standard Fire and Allied Perils Policy, Floater Policy, Declaration Policy, and Floater Declaration Policy. These fire insurance policies cover many kinds of dangers and losses of fires.
How Does Fire Insurance Claim Work?
In the united states and many other states, the dangers of fire are covered under the homeowner’s insurance policies. If the commercial property of the policyholder is damaged by fire, the homeowner insurance policy of the policyholder will be responsible for paying out claims. But unfortunately most insurance companies dey from paying out fire claims.
In the United States, a significant amount of damage is caused by fire each year. In 2019, the property damage caused by a fire in the whole country was worth 37.1 billion U.S. dollars.
Perils of fire are universal and in the united states almost every minute, the fired faculty have to answer a fire anywhere. Therefore, people should be fully aware of their homeowner insurance policy and their claim process.
Because when a fire happens it left disasters effect on businesses or homes plus a huge amount is required to repair businesses or home buildings. The policyholders should contact their insurers for paying out claims.
There are many forms of damages that a fire causes like damage to personal property and belongings, smoke damage, damage to the interrupted business, and loss of detached property such as sheds, fences, and garages.
Some insurance companies use tactful ways to deny and delay policyholders’ claims so that they can save their money. If any policyholder is facing a condition like this, he or she must take legal action against his or her specific insurer.
Fire Insurance Claims Examples
Approximately every year in the U.S. and U.K. thousands of houses are affected by fire, which shows the vulnerability of homeowners to fire hazards.
When the house is affected by fire, the homeowner has to face a difficult situation. They need to negotiate the overall loss with the loss adjuster.
The loss adjuster determines the amount of the claim based on the origin of the fire. Typically the insurer indemnifies the damage of the policyholder on two bases such as actual cash value basis and replacement cost basis.
There are many examples of fire insurance claims, but three are the most common Underinsurance house fire claim, Wide loss of home, and Cottage fire claim.
Homeowner insurance policies also protect if severe property damage occurs in the fire. In most cases, insurance policies cover 50 to 70 percent of fire damages.
For instance, if a house cost $350,000 in damage in a fire, an insurance policy protects it by providing a 50% or 70% claim.
Why would insurance deny a fire claim?
Most insurance companies find such reasons that help them to refuse fire claims. Because insurance companies just want to save their money.
For example, if a homeowner’s insurance policyholder is faced with a fire and an extensive property loss, the policyholder will demand a claim from the insurance company.
Because after the fire the building of the house was really in destructive form. Therefore, the policyholder needs to file an insurance claim to rebuild and repair the house.
But the insurer deny to payout the claim or underpaid the claim by putting lame excuses. This situation makes the policyholder stressed and anxious. Because the policyholders were loyally paying premiums to their insurers for years.
And now when they expect those premiums in the form of payouts, their insurers deny to payout these premiums on the spot. While their insurers should support them to recover the fire loss.
8 Reasons Insurance Companies Deny Fire Claims
There are many reasons insurance companies deny fire claims. Some reasons are involved deliberate or reckless behavior of homeowners in fire damages.
But some other natural reasons caused fire losses. Regrettably, most insurers ignore natural reasons and focus on homeowners’ deliberate or negligent behavior. So that they can deny paying out fire claims.
Some insurers struggle to discover reasons to refuse a claim or underpay a claim. Therefore, homeowner policyholders must have complete knowledge about their policies to get their rights.
Here I will explain the most common 8 reasons insurance companies deny fire claims and underpay these claims.
Insufficiency Of Evidences And Credentials
One of the basic reasons that insurance companies can deny fire claims is the insufficiency of pieces of evidence and credentials.
The homeowner must provide exact proof of fire and credentials to the insurance company for owning claims. Because if the details are not clear, there will be more chances that the insurance company denies the claim.
Policyholders also provide the value of expensive things in the house like furniture, clothing, sports equipment, gold jewelry, carpets, and paintings with receipts. If the policyholder lies in telling the exact value of these things, the company will deny the claim.
So policyholders must not lie even about a little few things. Because the insurance companies check all the receipts and credentials before providing the claim.
Missing Of Premium Payments
The second reason insurance companies deny fire claims is the missing premium payments. Premiums are charges that are paid in the form of installments each month.
Each type of insurance policy whether it is health insurance, car insurance, or homeowner insurance, premiums are essential in every type of insurance. The policyholder of a specific type of insurance has to pay premiums regularly.
The policyholder must keep the policy up to date by paying regular premiums. When the policyholders are getting late in paying premiums monthly, they effectively decrease the chances of attaining fire claims.
When policyholders don’t pay premium amounts, means insurers don’t have coverage for the claims. Because the insurer payout these premiums in the form of claims to reimburse the fire loss or damages.
The third reason insurance companies deny fire claims is the malicious and willful burning of houses. If the policyholder burns the house just for claims, the insurance company will not payout the claim.
Typically suspicious arson is the most common reason for insurance companies to deny a claim. Because if insurers have even a little doubt that the policyholder burned the house willfully just for getting the insurance claim, the insurance company will investigate the whole process and cancel the claim in a few steps.
If the insurers don’t have any proof of suspicious arson against policyholders’ burn house and still delay and are unpaid the claims then the insurers are playing unfaithfully. The insurer doesn’t have the right to deny or delay policyholders’ compensations without any reason.
Higher Deductibles And Exclusion Of Some Specific Damages
The fourth reason is the amount of deductible is typically higher and some specific damages are excluded. Generally, this is the basic reason the insurers refuse from paying out claims.
For instance, if the amount of the deductible is greater than the amount of house damage, the insurance company will easily deny insurance claims.
Have a look at one example, In case when the total amount of policyholders’ deductible is $1000 but the total amount of damage is about $900, the insurers are more likely deny the claims.
Some damages are also excluded from insurance coverage. For example vermin damages or war damages. Some other damages are also excluded such as the bursting of water pipes in winter by freezing temperatures.
Homeowners should take care of the functions of their homes properly and regularly so that they prevent the insurers from denying their claims.
The fifth reason is inadequate coverage which increases the chances of claim denials. This means some of the damages aren’t covered under the insurance policy. For instance damages from smoke and water typically do not fit into the insurance policy.
Only losses of flames are covered under the homeowner insurance policy. But mostly the insurance companies unfairly deny some claims that can be covered under the insurance policy.
Therefore, policyholders should carefully read the policy. In case the insurer unfaithfully refuses to deny the claim, the policyholder should contact an insurance dispute attorney.
Appraisal And Damage Disagreements
The sixth reasons that insurance companies deny fire claims are appraisal and damage disagreements. In appraisal disagreements, the insurance company can deny the claim If the policyholder demand payout which is less than the premium that they paid month after month to the insurance company.
For instance, if the burned house material’s cost is less than the claim, the claim will be denied based on appraisal disagreement.
Damage disagreements are also one of the reasons for claim denials. Fire insurance only covered damages that are caused by the fire directly. Sometimes the fire is caused by smoke and water, in that case, the policy doesn’t cover the damages.
Ultimately damage disagreement can take place between both parties insurance company and the policyholder. That disagreement can lead to claim denials.
Didn’t Call Emergency Services
The seventh reason for claim denials is that the policyholder didn’t call emergency services if a fire occur. Typically the homeowner should try to limit the fire instead of running out of the house.
For example, When the homeowner suddenly begins fire in the kitchen he or she must take precautions to limit the fire instead of leaving the house in danger.
Homeowners should use fire extinguishers to control the fire and also make calls to emergency services. So that there is no reason left for the insurance company to deny the claim.
Wildfire Cause Damage
The eighth reason the insurance companies can deny fire claims is damage caused due to wildfire. Sometimes the homeowner’s house is located in such an area where catastrophic destructive events occur unusually and greater danger of wildfire.
In that case, the homeowner should choose an insurance policy that covered the wildfire damages. Because in most cases the homeowner insurance policies don’t cover wildfire.
Do insurance companies intentionally deny claims?
No insurance company can not deny claims intentionally or deliberately. The main reason why they try to deny claims is the deficiency of pieces of evidence and documentation that is essential for the approval of claims.
In some other cases, some of the insurance also deny claims deliberately because they want to save their money. They try to find some reasons that assist them in refusing policyholder claims.
Insurance is a profitable business and insurance companies just consider their profits, the insurers aren’t on the homeowners’ side. They try their best to claim denials and search for more reasons to pay claims as little as possible legally. Insurance companies use every single number of reasons to refuse and lower fire claims.
So if the policyholder wants his/her claim doesn’t deny or underpaid, must hire a professional attorney, and an up-to-date policy regularly, and provide documents with pieces of evidence, so that insurance companies have no reason for claim denials.