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How long can homeowner’s insurance companies delay claim payments?

On Behalf of | Apr 25, 2024 | Homeowner's Insurance Matters |

Homeowner’s insurance is both a form of personal protection and a financial necessity for many people. Mortgage companies generally require homeowner’s insurance coverage to protect the investment they make when they fund a mortgage.

Even those who have paid off their homes typically maintain homeowner’s coverage to protect them against personal liability and the threat of unpredictable incidents that lead to property damage. Liability coverage can be beneficial if someone falls and gets hurt while visiting someone’s home. Homeowner’s policies can also help pay to repair damage after a fire or a major storm damages someone’s residence.

Property damage claims can be very expensive for insurance companies, and they have an incentive to reduce how much they pay policyholders. They may also try to delay payout on large claims as long as they reasonably can.

Alabama law limits claim turnaround time

A lengthy delay when a homeowner files an insurance claim could leave them with an unsafe or uninhabitable property until they receive the funds that they require to make repairs. Thankfully, policyholders can expect a relatively prompt response from their insurance providers because Alabama law imposes a strict timeline for insurance claims.

Companies have 15 days from the initial communication with the policyholder to acknowledge their claim. The company usually does this by sending special proof of loss forms to begin the formal claims process. Once the policyholder returns the completed proof of loss documents, the company then has 30 days to review the policy, look over the submitted evidence and make a determination about the claim. After notifying the policyholder of an approved claim, the company has another 30 days to issue the final payment on that claim.

Deviations from that timeline can sometimes occur in highly-unusual circumstances, but insurance companies should be proactive about communicating with policyholders when circumstances fall outside of the norm. When insurance companies unfairly deny claims or inappropriately delay claim processing, homeowners can end up in a very vulnerable position.

It is sometimes possible to hold an insurance company accountable for deviations from best practices and violations of the law. Having the right help when handling a homeowner’s insurance claim can reduce the likelihood of unfair outcomes and can help someone recognize when they may need to pursue a bad faith insurance lawsuit. Homeowners who get the right support during an insurance claim can minimize the setbacks and hardships that property damage may cause for them.