Business Insurance News & Views

What do you do when you aren’t happy with your home insurance claim

One of our long time clients, Robert, had a water damage claim on his home insurance almost a year ago. We thought the claim had been proceeding satisfactorily, but it turned out that it had not.

Water had leaked from Roberts kitchen, and damaged a lot of the kitchen cabinets below the counter-top.

The insurance companies claim adjuster gave Robert the choice of proceeding with the repairs using one of their preferred contractors, or Robert could take a cash settlement and use that money to arrange his own repairs and find his own contractor.

Robert decided to use the contractor recommended by the insurance company. In most cases, that’s a good choice. When starting a renovation to repair water damage, you often don’t know the full scope of the damage until you remove the drywall, flooring, and kitchen cabinets. Once the underlying structures are revealed, sometimes unexpected water damage or mould is revealed (perhaps there was mould damage to the basement ceiling that you couldn’t see because it was inside the ceiling ). Since Robert was using the contractor recommended by the insurance company, it would have been fairly straightforward for that contractor to report any additional damage to the insurer, and receive authorization for additional repairs. If Robert had taken a cash settlement instead, and hired his own contractor, he would have faced a more lengthy approval process to get the additional newly exposed water damage repaired.

Robert’s house was older, and needed some renovations. For more than a year, Robert and his wife had been talking about renovating their kitchen, and upgrading their kitchen cabinets. So they decided to do these renovations at the same time the water damage repairs were being completed.

This is when the claim got tricky.

The insurance company was obligated to put Robert’s kitchen back in the same situation that it was before the water damage occurred. This is the same for most home insurance claims. This meant replacing and repairing the kitchen cabinets below the counter-top. Any changes to the upper kitchen cabinetry would be up to Robert to organize and pay directly with the contractor.  Robert felt that the quote charged by the insurance companies contractor for the extra work was excessive, and he didn’t want to pay for it. It also didn’t make sense for Robert to hire a separate contractor to replace the upper Kitchen cabinets – he was worried that by using two different contractors, the  upper cabinetry might not match the lower cabinetry in terms of material and workmanship. When Robert approached the insurance company about the problem, they reminded him that this extra work was beyond the scope of the claim, and although they could try to influence the contractor to provide a price more suitable to Robert, they couldn’t force the contractor to give Robert a lower price.

We are negotiating with Robert and the insurance company for a second contractor (recommended by the insurance company) to come in and give a quote for the water damage repairs and the additional work. We also re-opened the option for Robert to take a cash settlement and hire his own contractor to do all the work. The last option is risky due to the potential for additional water damage to be uncovered as the work progresses – but it will solve the immediate problem.