Get Your Claim Paid: A Quick Review of the Mechanics

Insurance is a necessary part of a stable economy -- but insurance consumers are usually at a disadvantage in understanding their policies, negotiating and defending their own interests. The resulting disputes arise at the very time that policyholders need coverage most -- after the loss. So, the law generally recognizes that insurance claims disputes are unique in the disparate power of the opposing parties. This still doesn't make claims litigation easy. It's far better to avoid legal action entirely.

Throughout the course of this book, we will consider the specific steps you need to take to avoid particular kinds of claims hassles. But, some precautions apply to insurance generally.

• Shop on the basis of claims-paying reputation as well as price. Don't give a company your money -- no matter how cheap its rates -- if it has a reputation for consistently denying claims. (Your state Department of Insurance may or may not publish insurance companies' complaint histories. If it doesn't, you can check a company's financial condition with ratings agencies like A.M. Best, Standard & Poor's or Weiss.)
• Make an inventory of your personal possessions and a file of related receipts and warranties. A videotaped record is a useful extra effort here. Update the information whenever you buy or sell anything of significant value.
• If you suffer any loss that even might be insured, tell your insurance company immediately. An agent counts as the insurance company in this context -- but problems sometimes crop up between the agent and the company. So, notifying both (at least initially) isn't a bad idea. If theft is involved, notify the police or other authorities. And keep a log of all communications.
• If there's property damage, do what's necessary to prevent further damage, and keep track of your receipts for repairs.
• No matter how upset or angry you may be about the loss you've suffered, keep in mind that an insurance claim is a business transaction. Try to treat it as such.

If you run into trouble getting a claim paid, consider hiring an attorney to help make your point. (We'll consider the details of that process at the end of this book.) But, if you follow the guidelines suggested in this book and have picked a decent company, your claim will probably be paid with minimal hassle.