When natural disasters strike, damage to your property is an added stress that has to be addressed as quickly as possible. However, insurance companies frequently act in bad faith and offer lowball reimbursement on damage claims. A low offer of compensation combined with the stress of damage to your home or commercial property can compound the stress brought on by a natural disaster.
People buy insurance with the expectation that when the worst happens, they can expect fair compensation. Yet, many disaster victims find themselves battling their insurance companies following dangerous weather events.
“Filing an insurance claim can be confusing and stressful, especially if you’re displaced from your home, or your business income has been interrupted,” says public adjuster and founder of Tiger Adjusters, Ted Patestos. “Unfortunately, many find that months-long delays, underpayments for repairs, and wrongly denied claims drag out the process and compound the damages they’ve endured.”
Here, we explore why insurance companies often underpay for damage claims and what policyholders can do to better equip themselves to obtain the best possible reimbursement on claims following natural disasters.
The psychology behind lowball insurance offers
Underpayments from insurance companies are not just simple money-saving tactics by unscrupulous companies; there is deep reasoning and psychology behind lowball offers. Insurers recognize that following a natural disaster, individuals are under tremendous stress. Claimants just want their world to be righted, and they want the damage to be fixed quickly. This leads many people to accept settlements quickly without fully considering what they deserve.
“Insurance companies can often capitalize on the emotional and financial stress people are under following a natural disaster,” says Patestos.
Initial low offers also create an “anchoring effect,” which sets low expectations for those filing claims. Even if negotiations commence, the low initial offer psychologically prepares policyholders to expect an underpayment, regardless of the outcome.
“Insurance companies will use lowball offers to test a claimant’s resolve,” Patestos explains. “They basically want to see what they can get away with and gauge how desperate the policyholder may be.”
Insurance companies will often make a lowball offer to the policyholder shortly after the claim is filed, aiming to encourage a quick settlement and discourage the claimant from consulting a public adjuster or lawyer. Insurance companies are aware that having representation in negotiations can help claimants secure higher payouts, so they are hopeful that desperate individuals will accept a quick settlement, even if the offer is low.
The process of filing a claim and fighting for fair compensation can be taxing on most people, and adding in the additional stress of having just weathered a natural disaster can make the entire process exhausting and harm mental health. This is true not only for individual claimants but for entire communities that have just endured a natural disaster.
Reducing underpayments and friction in the payment process
“It’s reasonable for homeowners to expect that their insurance companies are going to be there for them when disaster strikes,” says Patestos. “However, that doesn’t always happen.” Many policyholders have relied on public adjusters to work for them in an attempt to counter lowball insurance offers. Public adjusters offer expert insights on understanding your insurance policy, navigating the claim process, and insurance tactics to expect following natural disaster damage.
“Conducting thorough inspections to identify damage that many insurance adjusters either overlook or undervalue is part of our duty to the policyholder,” says Patestos. Public adjusters work for the claimant, not the insurance company. They have a deep understanding of the insurance industry and the various loopholes and exclusions that insurance companies use to justify lowball offers and erroneous denials.
Public adjusters actively negotiate with insurance companies, saving policyholders the hassle of negotiating on their own. They can challenge lowball offers and push insurance companies for fair settlements.
When claimants turn to a public adjuster for help following a natural disaster, they tap into a wealth of knowledge and gain a fierce advocate. For commercial property owners, public adjusters can even help you recoup income lost from rents or business inoperability.
Public adjusters are often a policyholder’s best defense against lowball offers from insurance companies, leveraging their knowledge of policies and procedures to help individuals obtain the best possible settlement to repair damage caused by natural disasters.
When claimants have a better understanding of why insurance companies offer low settlements and how to protect themselves, they can better face the stress of property damage following natural disasters. Chronic underpayments, delays, and denials by insurance companies have begun to sow distrust and anger among premium-paying policyholders. As natural disasters continue to happen frequently across the United States, policyholders will need to learn how to protect themselves and where to turn to for help to secure the settlement they are owed under their policy.