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Homeowners' Insurance Claims Denied?

Texas island and coastal areas are prone to natural disasters and flooding. From the Galveston floods of 1900 to more recent disasters, the destruction from these storms has wreaked havoc on homes and businesses in the area. Many homeowners obtain insurance to protect against the loss or damage to their homes and personal property, but insurers may delay or deny claims, especially after natural disasters, because of the vast number of claims.

Texas homeowners making claims on their insurance policies have certain rights under Texas law. The Texas Department of Insurance (TDI) has the authority to develop rules for the rights and obligations of insurance policyholders. See Texas Insurance Code § 501.156. The TDI has developed the Texas Bill of Rights and requires that all insurers provide their policyholders with copies of it.

The Bill of Rights spells out the insurers' duties to homeowners and renters, including the right to information from your insurer, prohibited statements related to insurance, your right to insurance despite past water-damage or mold-damage claims, and the right to buy windstorm insurance coverage from the Texas Windstorm Insurance Association (TWIA) if you live in certain areas in Texas.

Rights When a Homeowner's Claim is Denied

Once a homeowner files a claim for coverage that provides all necessary information needed to process it, the insurer has 15 days to accept or reject the claim. If the claim is rejected, the Texas Bill of Rights provides homeowners with the right to a written explanation for the denial of coverage upon request. When a natural disaster is declared, this deadline may be extended to allow the insurance company time to process your natural disaster or weather-related claim and determine whether to accept or reject it.

If the insurer denies a claim, the homeowner has the right to dispute the denial. The policyholder should contact the insurer in writing to dispute the denial and include the policy number, state the complaint and explain how the policyholder would like the dispute resolved. The insurer may request that the policyholder go through an appraisal process to resolve the dispute if the policyholder disputes the insurer's offer. If the dispute involves a complete denial of coverage, additional steps may be necessary.

Complaints Filed with the Texas Department of Insurance

The TDI also provides a process to resolve complaints between policyholders and insurers. If the policyholder was unable to resolve the complaint with the insurer or the policyholder has not gone through the appraisal process with the insurer, the policyholder can file a complaint with the TDI, including detailed information about the nature of the complaint and the policyholder's desired resolution.

The TDI will share the complaint with the insurer and provide a third-party opinion as to whether the claim should be covered under the policy. TDI also has enforcement authority when insurers violate the law.

What Next?

If the policyholder is not satisfied with the results obtained through the TDI complaint process or has questions about dealing with insurers or TDI, he or she should contact an attorney experienced in insurance claim denials. Alternative dispute resolution (ADR), such as mediation or arbitration, may be a possibility. The denial of coverage could also be resolved at a trial. Either way, a policyholder will want to take detailed notes and preserve evidence of the claim at all points in the process to obtain full and fair coverage for loss or damage to property.

Article provided by Chaiken & Chaiken, P.C.

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