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Complaint 0 of 0 in "Offering Too Little Money"

Insurance Carrier: American Family
State: Minnesota

Consumer Complaint:

I had a hot water pipe burst 11-28-08. I had my insurance guy come out with a contracter and do an estimate. The contractor estimated the damages at $18,000. My insurance guy gave me a check for $15,000. I have gotten in touch with my insurance agent on 12-23-08 and she said she would get in touch with my insurance guy to see why he depreciated my house so much. It is now 1-3-09 and I have yet to hear back from anyone. I have been patient but now I'm staring to get upset. I have a son with asthma; my floors are getting worst and worst. I just want some anwers on why I'm only receiving $15,000 when I'm insured for $20,000 and the damages are $18,000. Plus I have not even lived in this home for 1 year. Please get back to me as soon as possible. Thank-You


Insurance Expert Answer:

I am actually pleasantly surprised that the adjuster quickly wrote a check for as much as $15,000, as we get lots of complaints about American Family, and you seem to have done far better than some. I don't know why the adjuster felt he could get away paying less than the cost, but these thoughts may help:

Your policy has a deductible. If the deductible is $1,000 and damages were $18,000 all you'd be entitled to is $17,000. That may be part of the difference. If the deductible were $3,000 you'd have been paid in full.

The fact that your repair guy estimated $18,000 does not mean that the actual damages or fair market value for the repairs is $18,000. Very often the adjusters know that the repair guys jack up estimates. Other times they know the job could be done for less by another repair firm. If you insist on the high price firm they need only pay the average cost for the repairs.

Very often they expect you and the repair guy to negotiate -- "all they'll give me is $15k." -- "what's the deductible" "$1k." "Okay I'll drop my price by $2k if you pay half now, 25% in a week and the balance when done."

The economy is bad so they know most contractors will quickly cut costs to keep working. I'd start negotiating with the repair firm, bring in firm 2 and 3 for another estimate and get the repairs rolling. I'd send LETTERS to the VP for claims at American Family asking for explanations too. Be polite but persistent. You're at least entitled to an explanation.

Avoid 800 numbers -- call centers are futile. Finally contact your state insurance department if all else fails; they are often ineffectual but sometimes they surprise us and help.