Can a Homeowners Insurance Policy Refuse to Pay the Full Amount?

Know exactly what's covered in your homeowner's policy and keep it up-to-date as your home value changes, your possessions increase and the area changes. Make sure your policy covers replacement cost instead of actual cash value, which is the cost minus depreciation. That can be substantial, for instance, if it costs you $1,000 to replace windows blown out in a storm and the insurance company deducts for the fact they were 20 years old.

Keep your values up-to-date. If your policy is for $100,000, and your house now worth $200,000 is a total loss, the insurance company will only pay you $100,000. Be sure your policy is for at least 80 percent of the replacement cost. Otherwise, the company will pay you less than full price for a partial loss, such as damage to one room.

Make sure you report all the details when you file a claim. Provide records of purchases, complete information on the type and cause of damage and include photographs, if possible, when you file your claim. Always notify your agent or claims office immediately when there is damage. Go with the adjuster when he views the damage or loss, ensuring that he doesn't just rely on some automated system that figures all windows the same or rooms based on square footage.

Don't cash any checks from the insurance company until you're satisfied with the amount. Endorsing a check indicates you accepted the settlement. Get a bid from a contractor for repairs or have an independent appraiser estimate value on such things as antiques, artwork or similar valuables so you can contest the company's appraisal. Get these in advance and give copies to the appraiser if you can.

Watch for tricks. If a storm blows off your roof and your possessions are ruined by an ensuing flood, the company may deny your claim because homeowner policies do not cover flood or water damage. If you live in an earthquake, hurricane or flood area, buy special insurance to cover these events. Otherwise, you will not be protected.

Appeal first to your agent if the adjuster's amount is below your expectations, then move up to a regional claims office. Consult a state department of insurance or similar government agency if the company still refuses to pay. Hire an insurance claims lawyer as a last resort. Sometimes, a letter from a lawyer will produce results, but you may eventually have to file a lawsuit.

Expect delays and confusion. It can take months to get settlements for claims from major disasters. Insurance companies also may dispute responsibility. If your neighbor's tree damages your car, for instance, your company may say it's the neighbor's responsibility, but that insurance company may say the tree falling was an act of God and not covered.