Claims are a part of life; they happen every day and range from life changing to an inconvenient nuisance. They all share a common element though; they all involve recovering from a loss and putting you in a condition comparable to where you were at before the loss occurred. While Insurance policies are designed to put you in the condition you were at the minute before the loss occurred, there can be disagreement as to exactly what that condition was and if it is possible to do so. Though conflicts are fairly rare, they do occur as mistakes and incorrect decisions are sometimes made. A good insurance company will work through these times to ultimately reach a fair conclusion. The purpose of this article is not to defend the insurance company, but to simply provide some background as to the reasoning behind why a  decison may be made. In the following paragraphs I will provide some examples of the more common claims that create questions.

Under the auto policy, questions tend to pop up most often under two circumstances. First, a car is damaged and the company is asking that reconditioned vs. OEM parts be used. The idea is that a five year old car has five year body panels and replacing those parts with brand new OEM parts is improving the car, while using reconditioned parts puts the car in comparable condition to how it was prior to the loss. Using reconditioned parts reduces the cost of the claim which helps keep premiums lower. Unlike 10 or 20 years ago when this was first introduced, from a safety and appearance standpoint, there should be no noticeable difference between the results of the two repair methods. The second scenario is payment for a totaled car. This can be a tough claim as we can all agree that when your car is totaled, it is hard to find a comparable example to buy. Instead, you will likely upgrade the car to meet your current needs. Unfortunately, this upgrade will not be paid by your insurance company as the insurance policy is only concerned with valuing the car that was lost, not the one that will replace it. The difference between the customer action and the policy coverage can be a tough point in a claim.

The home policy is generally a replacement cost policy, so repairs and replacements are done more on a basis of using current costs and materials to repair or replace items. The depreciation that is part of most policies is removed when a repair or replacement takes place. While this often reduces conflict on valuing a claim, there are still issues that occur when a customer wants replacement and the company wants to repair. Why does the repair vs. replace issue happen? It happens because the home policy requires the insurance company to choose the lower cost between repairing and replacing. If it is less expensive to repair, that is what the policy dictates. When there is disagreement with being able to repair an item, you will see the company rely on a third party to make the determination. You will be able to provide input, and very often choose, this third party inspector. This is especially true of large home losses where we will see a restoration company and a structural engineer brought in to make sure the decision made is the correct one. We also may see this anytime there is a question on the extent  and cause of damage . Your insurance company should be very open with the information they use to settle your claim. They should also let you bring a representative in to review the estimate and view the inspection process when there is significant disagreement. In most cases, we find that it is not the insurance company trying to be difficult as much as it is the company following the conditions of the contract.

When questions arise during the claims process, your agent is there to help you navigate through the process and ensure that your voice is being heard. In my next post, I am going to talk about how to make the claims process go smoothly.