Claim Problem
Claim Underpaid
The insurance payout does not cover the actual cost of repair or replacement. Understand why and what to do about it.
What This Means
An underpaid claim means the insurance carrier approved your claim but issued a payment that does not cover the actual cost to repair or replace the damaged items. This is one of the most common claim issues and can result from estimating errors, depreciation disputes, or scope disagreements.
Why It Happens
- Missing line items: The estimate does not include all damaged components.
- Below-market pricing: Unit costs do not reflect current local rates.
- Improper depreciation: Depreciation applied to non-depreciable items like labor.
- No overhead & profit: O&P excluded despite 3+ trades being required.
What to Check
- Request the full itemized estimate from the carrier.
- Compare every line item against your contractor's estimate.
- Check depreciation calculations for accuracy and legitimacy.
- Verify that all damaged areas were inspected and included.
- Confirm whether O&P is warranted and included.
What Should Happen Next
Submit a Supplement
A supplement is a formal request to revise the estimate scope or pricing. Submit with supporting documentation, photos, and a contractor's counter-estimate.
Request a Re-Inspection
If damage was missed during the initial inspection, request a re-inspection with your contractor present to ensure all damage is properly documented.
Invoke Appraisal
Most policies contain an appraisal clause that allows either party to request a binding appraisal process to resolve amount disputes.
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