What to Do When an Insurance Claim Is Denied

Insurance helps homeowners pay for repairs brought on by accidents and disasters. A well-rounded policy can cover everything from fire and water damage to vandalism and fallen trees. However, it’s important to determine what happens if you, a responsible short-term rental owner, have your home insurance claim denied.

The financial strain of having your home insurance claim rejected can be significant, throwing your household into economic chaos and disrupting your budgeting priorities. Understanding why you may have a home insurance claim denied can help you mount appeals to the insurer’s decision.

The information below seeks to help short-term rental managers establish a clear idea of the reasons why a home insurance adjuster may deny their claims, as well as what they can do to challenge denials and how they can work on their end to attain (and maintain) dependable financial protection.

Why Home Insurance Claims May Be Rejected

There are several reasons why you may have your home insurance claim denied. Some may seem out of a manager’s control, but many others may be actionable. Regardless, these reasons include the following:

Coverage Exclusions

Certain coverage exclusions may be listed in the fine print of a home insurance policy. Flood and earthquake damage, mold, pest infestations, and sewer backups are often excluded from policies without the policyholder’s notice. 

As such, it’s crucial to know what kinds of incidents may be excluded from a short-term rental owner’s policy. Some coverages may need to be taken out separately from the main home insurance policy as a result.

Expirations or Non-Payment of Premiums

A home insurance policy may lapse without the insured individual’s attention. Other managers may simply not make premium payments on time because they’re too busy with business matters. Nevertheless, merely being aware of your policy status and keeping current with payments can help avoid some denials.

Pre-Existing or Intentional Damage

Claims on damage that was inflicted before the effective date of the policy are usually not covered. Additionally, damage that’s judged to be the result of intentional or illegal acts is almost always excluded from short-term rental insurance. Documenting evidence and tightening your management can help prevent such acts.

Lack of Damage Control or Repairs

Property managers are expected to mitigate damage, enforce safety measures, and make necessary repairs, such as fixing leaks and upgrading electrical equipment, to deter future deterioration. Insurers may deny coverage if they have evidence such measures aren’t being followed.

Making Unapproved Repairs

Managers may conduct repairs on their properties that their insurers may not approve of. Common unapproved repairs include replacing walls or rooves, renovating plumbing, or adding more structures to the property. These things may be necessary to keep your property viable, though, so make sure your insurer knows about them before you begin.

What to Do if Insurance Denies My Claim

If their claims are denied, short-term rental property managers can take a few steps to correct problems or appeal the decisions:

Review the Denial

Check the denial letter and policy language to get clear on exactly why your claim was denied. Compare the denial letter against your policy terms and provisions to confirm the insurer’s justification and document any areas of unclarity or confusion.

Collect Evidence and Documentation

Take photos, retain receipts, and document correspondence on the damage and the insurance company’s response. This information could be critical to filing a successful appeal on the insurer’s rejection.

Call Your Legal Representation

If negotiations between you and your insurer fall through, contact an attorney with experience in litigating home insurance claims. A lawyer with a more detailed background in short-term rental properties can be especially useful in such a case.

Find a Public Adjuster

Property managers may be able to find public adjusters through referrals, online directories, state insurance departments, and local associations. They work independently of insurers and serve as advocates of property managers, especially when certain claims are disputed.

File a Complaint With the State Insurance Board

If you have exhausted all the preceding steps with no success, you may choose to lodge a complaint with your state’s insurance board. However, it should only be undertaken as a desperate last resort, and it may not be advisable in all situations. It may result in a lengthy and complicated process with multiple delays and resource depletion and also likely strain your future relations with the insurer.

How to Prevent Policy Rejection Before It Happens

Short-term rental property managers have many responsibilities and duties to fulfill that, when handled properly, can mitigate the chances of their claims being denied. 

While these won’t necessarily work in every situation, they’re still good steps to take regarding vacation rental management that can improve your overall property condition:

Report Losses Quickly

Your insurer may offer a generous deadline for reporting claims, with some being as long as 180 days. Nevertheless, you should file your claim as soon as possible after the damage is incurred, as doing so can get the ball rolling on the approval process in a much more timely manner.

Document Every Detail of the Damage

As stated above, you must document your claim with photos, videos, witness statements, repair estimates, and any other evidence to back up your claim. Documentation is one area where worrying about providing too much information doesn’t apply. Every detail you can offer is crucial.

Itemize Your Damages

Be exact about the losses you’ve suffered. Each report can help generate an accurate valuation of damage, repairs, and replacement. Itemizing your rental property’s losses can help speed up the process and prevent disputes.

Review Your Policy Frequently

As often as you can, take the time to examine your home insurance policy and confirm its terms and conditions. Doing so may not be the most pleasant task to conduct on a monthly basis, but it could help you gain absolute clarity on what the policy covers.

Safely: Serving the Short-Term Rental Manager Community

Safely focuses on lining up insurance policies for short-term vacation rental managers. The market for such properties is only expanding, and Safely wants to make sure responsible property managers have all the resources they need for securing home insurance. Contact us today to find out more.