Homeowner Claim Denials

A standard home policy only covers damage caused by specific events. Those events are fixed with a Date of Loss that lies within the policy term. The policy is not a maintenance contract; however, damages that fall outside the insurance contract are often related to normal maintenance. Here are some suggestions to help navigate avoiding some costly scenarios.

Top Reasons for Claim Denials

Neglect and Lack of Maintenance: Wear and tear, mechanical breakdown and , deterioration are normally excluded losses by insurers. Homeowners are expected to keep up with regular maintenance, which reduces the likelihood of damage happening in the first place. Insurance coverage is for sudden and accidental occurrences.

Excluded Perils: There are specific events that are not intended to be covered. There are often separate coverages that can be obtained specifically for them. Some examples include flood, earthquake/landslide, vacancy, damage caused by animals like vermin, birds, rodents, pets, wet or dry rot, fungi and mold.

Material Change: Application for insurance coverage is based on information provided at the time of submission. An insurer agrees to cover the property during the term provided there aren’t material changes to the use or ownership of the dwelling. Changes become material when the insurer, when faced with seeing the change, would not have accepted the risk had they known it was going to happen. An example includes having multiple tenants that are not related (boarding house).

Misrepresentation: Exaggerating damage or providing inaccurate information is a major cause of denial. If a false demand for any loss is made on a policy, it could eliminate the entire claim. The insurer will normally require some kind of Ownership Documents that verify that property being claimed was owned by the policy holder. These include receipts of original purchase, video/photo, manuals, packaging, etc.

Late Filing: Part of the acceptance of an application is the insurer’s right to inspect the damage promptly. It is one of the Statutory Conditions in the Insurance Act of BC. Waiting too long to report a claim could result in rejection.

Exaggerating damage or providing inaccurate information is a major cause of denial. If a false demand for any loss is made on a policy, it could eliminate the entire claim.

Proactive Maintenance Tips (Prevention)

Roof Inspection: Regularly inspect for worn shingles, gaps in flashing and , deteriorated caulking seams, as roof leaks are often due to long-term wear and are generally excluded. The removal of moss, pine needles and other sources of fuel for fire prevention can save your home.

Water Management: Regularly clean gutters, eavestroughs and downspouts. Ensure proper drainage from the roof with downspout extensions away from the foundation and check for signs of moisture in the attic.

Plumbing Checks: Inspect plumbing fixtures, washing machine and dishwasher hoses, refrigerator water lines and water heaters for leaks to avoid “repeated seepage”. Many of these can leak slowly and manifest when rot or mold shows (tub or shower enclosures). When leaving the property for an extended period, such as vacation, consider shutting off the main water and drain the pipes/toilets to avoid any freezing or vandalism hazards.

Seasonal Property Inspections: Check windows and siding for rot and other damage, especially after winter and storm seasons.

Never conduct permanent repairs before an adjuster has inspected the damage. While the insurer has the right to inspect the damage it is incumbent on an insured to mitigate their loss.

Documentation Checklist

Pre-Damage Inventory: The best way to document ownership of your personal contents and interior home appearance is to create a digital room-by-room video. It also assists with accounting for all your items in the event of a major loss (fire or theft). It can be very difficult to remember everything you had without some kind of visual reminder.

Immediate Post-Damage Photos: Take detailed, time-stamped photos/video of all damaged areas and contents before repairs begin. This will also help the claims process in the event an adjuster does not attend the loss site in person.

Repair Receipts and Invoices: Keep all receipts for emergency activity. This includes additional living expenses if the home is not inhabitable and mitigation work such as water extraction services, plumber attendance and temporary repairs (boarding up windows and tarping).

Communication Log: Create a log recording dates, times, and names of insurance representatives spoken to, along with summaries of conversations. There can be many people inserted into the claims process. These include your adjuster, emergency contractor, other contractors submitting bids for quantification, contents experts and fire or police personnel.

Filing and Negotiation Considerations

Report Promptly: File the claim with your broker as soon as possible after damage has been discovered. Claim occurrences don’t follow a business day and your broker will have after-hours guidance available for you.

Do Not Make Permanent Repairs Immediately: Never conduct permanent repairs before an adjuster has inspected the damage. While the insurer has the right to inspect the damage it is incumbent on an insured to mitigate their loss. This includes arranging for emergency or temporary repairs to protect the property from further damage.

Understand Actual Cash Value (ACV) vs Replacement Cost: Depending on your policy, the basis of payment may be either ACV or Replacement Cost. ACV is a depreciated value derived from the actual cost to replace contents or building’s restoration. Contents that are not replaced or building damage that is not restored are examples of when ACV would be applied.

Create a log recording dates, times, and names of insurance representatives spoken to, along with summaries of conversations. There can be many people inserted into the claims process.

Appealing a Denied Claim

Review the Denial Letter: Read the letter carefully for the specific policy exclusion mentioned. Review the denial with your broker if you are still unsure of the reasoning.

Gather New Evidence: We recommend getting second opinions from independent contractors or engineers to support the claim.

Formulate a Formal Appeal: There are provisions in the Insurance Act of BC to resolve disagreements in the form of a Dispute Resolution process. If you have access to a Claims Advocate through your broker, they can help you with this. There may be forms required for completion, notarization and submission before the process can be invoked.