Signs of an Underpaid Property Insurance Claim

Start with the estimate, not the check

The payment is the last number in a long chain. To understand it, you need the insurer’s detailed estimate, the line-by-line document the payment was built from. If you do not have it, ask for it in writing.

Florida requires a residential property insurer to send you a copy of any detailed estimate its adjuster generates within 7 days after it is generated (s. 627.70131(3)(e)). A preliminary or partial estimate must carry a printed statement that it may be revised as the insurer keeps evaluating the claim, and a payment that is not full and final must say the insurer may issue more payments (s. 627.70131(6)).

A short first estimate is not proof of bad faith. Adjusters often work fast after a storm, hidden damage may not be visible on the first visit, and some damage only appears once repairs begin. That is part of why estimates can be revised, and why it pays to read yours closely.

Things to check on the estimate

Go through the estimate with your own photos and a tape measure. These are the gaps that come up most often. Each one is a question to ask, not a conclusion:

• Missing rooms or areas. Compare the list of rooms, roof slopes and elevations to your property. A closet, attic, garage or second bathroom can be left off.
• Missing line items. Look for tear-out, haul-away, drying, underlayment, trim, painting adjoining walls, permits and contents moving. If the work is needed to finish the repair, it usually needs a line.
• Quantities that do not match. Square feet of flooring, drywall or roofing that are smaller than your measurements.
• Repair where replacement may be needed. On homeowners policies that pay repair or replacement cost, Florida requires reasonable repair or replacement in adjoining areas when replaced items do not match in quality, color or size, unless the policy provides otherwise (s. 626.9744(2)).
• Unit prices that look off for your area. Prices should reflect labor and material costs where the property is.
• No code upgrades. Work the building code requires once repairs start may be covered under law and ordinance coverage, if your policy includes it.
• Depreciation that looks heavy. Check the age assigned to each item and whether depreciation was applied to labor as well as materials.
• No overhead and profit on a multi-trade job. Some estimates add a line for a general contractor’s overhead and profit when several trades need coordinating. Whether it applies depends on your policy and the job.
• Contents or living expenses left out. Personal property and additional living expenses are separate coverages and often need their own inventories and receipts.

For how each part of an estimate is built, see how insurance claim estimates work.

What you may see on an estimate, and what to check

Compare the payment to the estimate and the policy

A check smaller than the estimate total is often expected, not a sign of underpayment. On a replacement cost policy, Florida requires the insurer to pay at least the actual cash value of the loss, less the deductible, at first, then pay the remaining amounts as the work is done and the expenses are incurred (s. 627.7011(3)(a)). The standard homeowners form works the same way for buildings: the insurer pays no more than actual cash value until actual repair or replacement is complete (ISO HO 00 03 sample). The withheld amount is usually recoverable depreciation. Our posts on ACV vs RCV and recoverable depreciation walk through it.

The deductible comes off too, and hurricane deductibles can be large. The question is whether the numbers that remain add up to the work your property needs.

Code work is a common gap. Under s. 626.9744(1), a homeowner may not be required to pay for betterment required by ordinance or code, except the deductible, unless the policy specifically excludes or limits it. Under s. 627.7011(2), a homeowners policy that covers the dwelling is deemed to include law and ordinance coverage of 25 percent of the dwelling limit unless you rejected it in writing. Your declarations page shows what you have.

Florida also requires the insurer to give you a reasonable written explanation of the basis in the policy for a payment, denial or partial denial, and, if it pays less than its own detailed estimate, a written explanation of the difference (s. 627.70131(7)(a)).

What you can do about it

Most gaps are settled by plain communication. Work through these in order:

• Write to the adjuster, list each item you think was missed, and attach photos and measurements.
• Ask for a reinspection if the first visit missed areas, and be there for it.
• File a supplemental claim for damage found later. Notice is due within 18 months after the date of loss (s. 627.70132). See claim supplements.
• Request state mediation if the dispute is over the cause or amount of a residential loss. The insurer bears the cost of the conference (s. 627.7015), and if you settle, the DFS mediation page says you have three business days to rescind as long as you have not cashed the check. Adjusterman is not affiliated with the program.
• Consider appraisal if your policy has it and the dispute is only about amount. See the appraisal clause.
• If the insurer denies coverage on legal grounds, or you are thinking about a lawsuit, that is where a Florida attorney’s role starts.

Before you respond to an offer, read our guide on how to accept or dispute a settlement offer.

When a gap may not be worth pursuing

Be honest with yourself about the size of the gap. If the difference is small next to your deductible, if the insurer has already paid what the work actually costs, or if a phone call fixes a missed line item, you may not need anyone’s help. Some denials and low offers also rest on real policy limits, and our list of common reasons Florida claims are denied explains the main ones.

If the gap is larger or you cannot tell what is missing, a second set of eyes can help. Adjusterman offers a free claim review: we read your estimate and policy and tell you whether anything looks missing before you decide anything. See homeowners claims or request a claim review.