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What if homeowner’s insurance won’t fully cover repair costs?

On Behalf of | Jul 23, 2023 | Homeowner's Insurance Matters |

Homeowner’s insurance provides coverage that can pay when someone has to make major repairs following a fire, inclement weather or even criminal activity at a property. People invest in different amounts of coverage depending on their personal circumstances, including the overall value of the property. Those with financial instruments secured by the home will almost always require homeowner’s insurance, and many others purchase it for personal protection. 

After an incident that results in significant property damage, homeowners will then turn to their insurance coverage as a means of covering those expenses. What happens if the insurance company only offers an unreasonably low settlement? 

Unreasonable settlements could constitute bad faith insurance

How much an insurance provider will pay for repairs to a property should reflect both the extent of the damage to the property and the policy paperwork. If there are limits to coverage, homeowners generally cannot expect to receive more in compensation than the coverage that they purchased, even when their losses are far higher. 

However, when a low settlement is below the policy limit and also below the repair costs, an attempt to settle for far less than the full cost of repairs could constitute bad faith practices on the part of the insurance company. If negotiations result in a more reasonable settlement, then there may not be any significant issues. 

However, if the company remains firm and will not negotiate despite a policyholder invoking the terms of their policy and estimates or invoices from service providers, then it may be necessary to take legal action. People can dispute the settlement offer and ask the courts to determine if the company has operated in good faith. 

Pursuing a bad faith insurance lawsuit in civil court can result in a homeowner finally obtaining the compensation they need to repair their property.