Will Insurance Protect Me if My House Burns Down?

As a homeowner, you expect a house fire to be covered through your homeowner's insurance policy. Still, there are times when you could get a nasty surprise. Here are some reasons your claim may be denied.

The home is underinsured - Coverage limits are usually based on market value for the home. It doesn't cover expenses that are incurred because of a natural disaster. For example, the California wildfire made construction costs go through the roof. Your home's policy won't factor in these kinds of circumstances.

Your personal belongings are underinsured - Your replacement coverage for your personal belongings may not cover the true value of your home's contents. That's why it's essential to review your policy from time to time, especially if you've lived in your home for a long time. That cheap furniture you bought right after college has likely been replaced gradually with higher-end items.

Premium non-payment - If you fall behind on your premiums, the insurance company does not have to pay out on a loss claim. Keeping up with insurance payments is crucial.

Inflating the value of lost belongings - You can have your fire claim rejected if the insurance adjuster feels like you've inflated the value of your lost belongings. That's why you should keep a cloud-based inventory of your belongings. Take pictures or make a video of all of your belongings. 

Arson- As stated previously, if you or anyone of your family members started the fire on purpose, the insurance company is not obligated to pay out on your claim.

Illegal activities in the home - Evidence of unlawful activities in the home could invalidate your claims, such as the manufacturing of meth or other drugs. 

Electrical work without proper permits or inspections - Any electrical work must be done with all the proper permits and inspections. If the insurance company finds that work was improperly done, your claim could be rejected. 

 What do I do if my house fire claim is denied?

You should get a formal "Reservation of Rights" letter that details precisely why your claim is being denied. Once you get this letter, a time clock starts ticking. You have a deadline to respond. However, your insurance company still has to help you if you're paid up on your premiums. 

You can file an appeal with the insurance company when you receive a denial letter. Still, if you feel like your insurance company is acting in bad faith, you should contact one of our personal injury lawyers to file a bad-faith lawsuit.

What is a bad-faith lawsuit?

We all know that insurance companies do everything they can to minimize payouts or deny claims altogether because it's a business about making money. But when you have a valid claim, and they are deliberately making your life impossible, that's acting in bad faith, and they can be held legally accountable through a bad-faith lawsuit. 

A bad-faith lawsuit isn't the answer if you and the insurance company just aren't seeing eye to eye. However, a bad-faith lawsuit would be a legitimate option if the insurance company refuses to show reasonable grounds to deny your claim. Another example of acting in bad faith is ignoring evidence that supports your claim while actively looking for evidence that refutes it. 

States have laws that are enacted to protect people from unethical insurance companies. When an insurance company breaches the duty of good faith and fair dealing, you can recover the total of benefits you were denied, plus any other financial losses tied to the bad faith dealing. You could also be eligible for compensation for the emotional distress you've been put through. In some cases, if their behavior was particularly bad, you could even win punitive damages, which usually comes to a high dollar amount. 

Our bad faith insurance attorneys will handle everything—from negotiations and legal paperwork to representing you in court. You’ve been through enough after losing your home to fire. Insurance companies, even the largest ones with top-tier attorneys, can be held accountable. When facing big insurers, you deserve representation from a firm with equal strength and resources. Morgan & Morgan is one of the largest and most accomplished law firms in the U.S., with over 1,000 trial-ready lawyers and thousands of support staff. With our resources and expertise, we’re here to help you rebuild. Contact us today for a free case evaluation.