Working Through the Property Insurance Claim Process in Minnesota

When fire damages your home or business, you must think fast and act quickly. You must get your family or employees to safety and summon the fire department to extinguish the flames. Next, you must call an emergency repair contractor, take steps to protect your property, and contact your insurance company.

Once the immediate danger is past, you can step back from emergency-mode. It’s important to slow down, assess the situation, and decide how best to proceed. Here are a few questions to consider.

Do I need legal assistance with my property claim?

Before the adjuster knocks on your door, it’s important to decide if you need help with your claim. If your damage is minor, you may feel comfortable managing the details on your own. When your property is extensively damaged, it’s a good idea to consult with an attorney about the loss so that you can ensure that you are getting the most out of your policy’s ability to protect your legal and financial interests. Here are some critical early decisions that must be navigated after a large property loss:

Hire smoke and soot removal services
Contract with construction and restoration contractors
Inventory contents for repair or replacement
Salvage property
Homeowners: find alternate living arrangements
Business owners: continue operations elsewhere

What should I expect during the adjuster’s first visit?

Property adjusters always conduct a basic investigation to confirm that the cause, date, and circumstances of your loss are covered by your policy. For minor damage claims, the adjuster may inspect the damage, obtain reports filed by the fire inspector or other authorities, and ask a few questions.

If you have major damage or the investigation uncovers hazardous conditions, policy violations, or signs of fraud or arson, the investigation will delve much deeper. The adjuster may want to document your version of the events with a recorded statement. Your insurance company may review your credit report, personal finances, and work history. The adjuster might talk to your neighbors before they take a position on coverage and/or payment.

What happens if the adjuster decides there’s a problem with my claim?

While one adjuster might conduct a basic investigation and move forward with damage estimates and payments, another adjuster might see the same facts and decide your fire claim warrants an arson investigation.

When something like this occurs, your insurance company will reserve their rights in writing. A reservation of rights letter allows the insurance company to continue handling your claim while preserving their right to deny coverage in the future if the facts they uncover lead them to believe no coverage is available for the claimed loss.

Shouldn’t I expect fair treatment from the insurance adjusters?

In theory, you should always expect the insurance company property adjuster to handle your claim fairly. After all, both Minnesota and non-Minnesota insurance companies and adjusters are licensed and regulated by the state. They are all governed by Chapter 72A of the Minnesota Statutes, which outlines claim-handling standards and guidelines. In theory, adjusters comply with policy terms and state standards. They pay you based on coverages outlined in your contract. Unfortunately, that’s not always the reality.

Property adjusters don’t necessarily set out to underpay you or mishandle your claim. Some adjusters are simply inexperienced or improperly trained. They may misinterpret your coverage or delay settlement rather than make a payment in error. Other adjusters may be too overworked to give every claim the attention it deserves. These possibilities should encourage you to learn all you can about your property coverage and the claims handling process.

Can I rely on the adjuster to answer coverage questions?

When you ask your adjuster a reasonable question about your insurance policy and what it covers, you should expect a reasonable reply. Unfortunately, whether an adjuster is experienced or a newbie, the response will likely be “Read your policy.” You’ve probably never read your policy. And if you’re like consumers who took a recent survey conducted by insurance company startup, Hippo, you probably have only a vague idea of what’s covered. Not knowing can put you at a disadvantage when you’re negotiating a complicated property claim.

How do I read my policy?

Your policy is a contract. It explains the relationship between you and your insurance company and tells you what is and isn’t covered. Insurance companies have made policies easier to read over the past few decades, but they’re still difficult for non-legal and non-insurance professionals to understand.

When you’re managing a serious property claim and communicating with a property adjuster, it’s important to at least try to understand how your policy provides coverage. Each policy is broken down into sections. Each section serves a specific purpose.

Declarations Page – shows property location, policy period, insurance amount, deductibles, policy form number and endorsement lists, mortgage company
Insuring Agreement – lists perils and property the company agrees to cover
Definitions – explains relevant terms
Exclusions – explains what’s not covered
Conditions – explains what you must do to comply with your policy terms
Endorsements – explains additional coverages (and exclusions) added to your policy

You’ll find these sections in homeowners policies, commercial package policies, and basic property policies. Together, they tell you what the company agrees to pay when you have a property claim. They also explain the rights and responsibilities of all involved parties.

How will my insurance company decide what my claim is worth?

When your property sustains major damage, it takes time to estimate the total scope of the loss. The adjuster will work with your contractors and service providers. They’ll submit initial estimates, but with multiple contractors and subs, changing labor costs, higher material prices, and unexpected damage, there’s always the possibility of additional expenses once the job gets underway. That’s why it’s important never to sign a final release until you’re satisfied that the work is complete.

An insured does most of the work in determining the value of damaged personal or business property. During the early stages of your claim, you identified and separated the repairable contents from the replaceable. That’s when you began the initial work of listing and evaluating your personal property. The inventory you created should provide a good foundation for establishing replacement costs and depreciation.

On most policies, personal property settlements are paid on an actual cash value basis (ACV): replacement cost less depreciation based on property type, age, and use. It’s important for you to do some of the pricing research. Adjusters may calculate your payment using like kind and quality (LKQ) replacement prices far lower than your original purchase price. This could result in a low contents payment.

Are there any other claim facts I should know?

Here are a few issues to think about as you work your way through the property claim handling process.

Additional Living Expenses – If your home is damaged and you must live elsewhere, your policy will pay for hotels, food, transportation and other extra expenses until your home is habitable again.

Business Interruption – Businessowners policies and other commercial package policies pay to operate your business at a different location and other key business interruption type expenses.

Coinsurance – Building coinsurance provisions require you to maintain coverage at a certain percentage (usually 80%) of your building’s replacement cost. When you fail to meet this guideline, the company reduces your payment, making you a coinsurer of your claim.

Contractors – Adjusters have no right to influence your choice of repair contractors. You don’t have to use their recommended contractor unless you want to.

Proof of loss – Your proof of loss can become a problem but only if the adjuster wants it to be. Your policy requires you to submit it within 60 days of the company’s request. It’s basically a recap of your claim, including the incident, damages, documentation, etc. It often becomes a “read your policy” moment when an adjuster uses it as the reason why they haven’t paid you.

A Property Attorney Can Help

Whether your personal or commercial property is damaged by fire, windstorm, or some other covered peril, the claim experience can be frustrating. Coverage and damage issues can seem especially complex if your damage is severe or you’re working with a difficult adjuster. Our legal team can provide a wide range of services to help you manage your claim, including but not limited to:

Occurrence investigation
Policy review
Explanation of coverage, rights, and duties
Coverage declination resolution
Contents loss documentation
Proof of Loss preparation
Insurer settlement negotiations
Policy-mandated appraisals
Bad Faith lawsuits against your insurance company

When you need help with your property claim, contact us. Our experienced attorneys will work with you and your insurance company during the claim-handling process. We’ll make sure you’re treated fairly.


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